KKR & IFC-Backed Finance Firm Magma Fincorp's Q1 PAT Slips 5.73%

12 July, 2011

Kolkata-headquartered non-banking finance company Magma Fincorp Ltd has posted a net profit of Rs 17.13 crore for the quarter ended June 30, down 5.73 per cent over the year-ago period even as total revenues rose 23 per cent to Rs 221 crore in the same period.

“We are definitely seeing margin pressure coming in,” V Lakshmi Narasimhan, CFO of Magma Fincorp, said in an interview to a private news channel.

Magma Fincorp provides a bouquet of financial solutions including financing of utility vehicles, cars, commercial vehicles, construction equipment, tractors and SME loans. It has a base of over 2.36 lakh customers and has assets of Rs 11,030 crore ($2.4 billion) under management, as of June 30, 2011.

As far as the operating profit before other income and interest is concerned, the company posted Rs 145 crore during the quarter, as compared to Rs 101 crore during the same period a year ago. But the firm’s earnings was hit by sharp rise in interest and finance charges as cost of funds went up due to monetary tightening of the Indian central bank.

Magma Fincorp scrip crashed 7 per cent to Rs 73.15 a share on Tuesday after it announced its results at the Bombay Stock Exchange. Shares of Magma Fincorp closed at Rs 73.15 per scrip, down 7 per cent from previous close.

The company aims to grow at a faster pace in Q2 and open 25-30 new offices in the coming months. It is hoping to grow disbursals by 50 per cent in FY12 with focus on high yield segments like tractors, used CVs and SME segment. This high margin segment is expected to be a quarter of the disbursals this year.

Private equity giant KKR and IFC have together invested Rs 440 crore ($100 million) in the non-banking finance company in the last quarter. While KKR invested around Rs 236 crore ($52.4 million) to buy 14.95 per cent stake, IFC pitched in with Rs 202.4 crore ($45 million).

While IFC will own 12.8 per cent of the company post-dilution, promoters’ holding has come down to 29 per cent from 41.6 per cent in the previous quarter.


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KKR & IFC-Backed Finance Firm Magma Fincorp's Q1 PAT Slips 5.73%

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