What I want to talk about is in specific your MSME book, because while the decline there continues for the past two quarters, NPAs have also seen a decline. What is the strategy regarding this segment and where is it that in particular you see the MSME book going on given all the macro parameters that we just talked about?Rajesh Sharma: So, what we have done in the MSME subset, while one MSME product is lent to those small micro entrepreneurs, now what we have done, we also launched one more sub-five lakh category product in the micro lap, two quarters ago. Now last quarter, we launched the rooftop solar financing in the MSME. So, I clearly see while this year is the addition of the two product under MSME will give us a growth of about 10% plus. Next year onwards, the MSME should return with the growth of about 20% plus.
I want to talk about your car loan segment as well, because that was pegged to give very high growth numbers, but the growth is only about 8%. Yes, there is a slowdown in that segment, we have seen that and we have observed that as well in the monthly sales data and all the earnings that the companies are reporting, but what is your own sense on whether or not the festival demand can actually sort of make that J-curve happen and there could be some swing coming in.Rajesh Sharma: So, there is a lot of demand after this Shradh month gets over, the demand is coming back on Diwali month and everything. But there is a competition intensifying and what we work is we work on a unit economics basis. So, every car, we share the lead with the banks and get we see that we are profitable.
While ensuring that what is happening, the competition, some of the places are giving more money than they are earning and they are burning the cash. But our model is of the purely do at a lower margin, we only do those business where we make money. So, with that philosophy, we see some pressure on the number. But overall basis, we will not do lesser than what we did last year, at least 10% to 15% growth we should be able to achieve.
You said that your NIMs would be in the range of 8.5% to 9%. You have done 8.3 this time around. Any revision in the guidance or do you think you will manage to scale up and close the financial year with 8.5% to 9% range?Rajesh Sharma: So, I will say that NIM, if I leverage more, NIM will be down, but that is not going to change my profit margin. So, my spread will be maintained at 7% going forward as well. And the more micro lap share goes up and more the rooftop solar also goes up where I think we will securitise some of the portfolio, I clearly see that our 7% margin might go to about 7.1 or 7.2, but this spread if we are able to maintain the growth, I think this will give us a yield uptick on quarter on quarter basis.
So, what is the target for AUMs for the close of the financial year?Rajesh Sharma: So, close of the financial, we are targeting about 23,000 to 24,000 crore and in the next 27, our target guidance is 30,000 crore, I think we are well within that. Even the moderate growth we do, we should be able to achieve that target. But our focus is now increasing on how do we improve our product efficiency, how do we improve our branch efficiency, how the technology and data science capability where we invested heavily in last two years by putting 125 engineer and 25 data scientists, how those processes become better. So, we are more focusing on improvement of the margins.
I want to go back to the state of the economy right now. We know that there has been a slowdown in the rural end of the market and we know that inflation also has been hurting. Considering you got your eyes and ears close to the ground, tell me what is the situation like and whether or not beyond consumption also the slowdown is going to spread through?Rajesh Sharma: So, so far we have not seen that, maybe our base is too small because still we are only at MSME base. We talk about only 4000 crore and about 35,000 customer, but the overall credit demand, we see that there is adequate hunger for the growth is happening and ideally the second half in the banking sector, NBFC sector is always at least 50% higher than the first half. So, we see the clear action coming in. I will see that growth will slow down when I see the challenge in the collection efficiency, delinquencies are rising. If we see that happening, that will be more worrying than anything else.
And you do not see that happening right now?Rajesh Sharma: So far we have not seen that. We have seen that now happening on the microfinance side, so we are little cautious. We are paying more attention to it and we are observing very carefully.
Gold loan of course as a segment has done extremely well. You have seen an uptick of 225% as I see it. What is the future visibility given the regulatory hawk eye on this segment?Rajesh Sharma: So, I think regulator is making NBFC more robust and more process driven, more technology system driven. So, I think that is a good aspect that everybody is paying attention on that and we welcome that. Having said that the gold loan customer, there are two thought process. One is if we will not fund that customer, that customer will essentially go back to the money lender with much higher rate of interest. So, I think we have to bring more formalisation of the credit to the small borrower, where I personally believe that gold loan is a very-very good product to bring those customer back to the formal economy where their gold does not get forfeited. They need not to pay 36% pricing. So, I think that way it has a positive social impact that you can give them a loan in a very formal, very competition manner. I think idea should be to enhance more competition rather than slowing it down.
And you plan to leverage the digital segment of your business to try and spread that?Rajesh Sharma: Yes, so digital, so far we have not gone in an unsecured lending. Digitally what we are doing, we are focusing more automating our processes internally and that we have done. We have taken the Oracle LMS and then LOS in-house built, we have built the in-house sales mobility app, we have built focusing on the collection, building our own collection app and collection system and now we are focusing on the process efficiency, so that is where our attention and investment going on.
And going forward, which segment, whether it is housing, gold loan, car loans, where do you think the big kicker and the big growth will come in from?Rajesh Sharma: So, I think we are equally growing from MSME, affordable housing, micro lap, solar rooftop financing is of course new but we will scale it up. Construction finance is another vertical we are funding the small developer for the affordable housing purpose. So, all the sector will kick in. Now is a well diversified and we are seeing almost about 6 lending product and 2 distribution product where only pure fee income play is there, car loan distribution.
So, now we build that distribution, we close to about 1050 branches we will be having at this end of the year, about 10,000 employees we have, very good technology team is there. So, I think now the time will come that quarter on quarter we will leverage on our efficiency and we will focus on the better profitability.
