Aggressive loan growth to continue: SHFL

Housing lender plans to add branches, raise headcount, says MD

Sundaram Home Finance Ltd. (SHFL) expects aggressive loan disbursement growth to continue in the current financial year, said Managing Director Lakshminarayanan Duraiswamy.

“The segments and geographies that we are targeting have continued with the positive trend this year,” Mr. Duraiswamy said. “Demand has been consistent over the last 3-4 quarters. This is an indication that the growth story in the real estate space remains intact.” Disbursements for the quarter ended March 31 rose 73% to ₹794 crore from a year earlier. The company disbursed more than ₹300 crore in March alone, the highest in its history.

“We continue to focus on tier 2 and tier 3 towns and expect those locations to drive our growth this year,” he added. “Our ability to understand the customer and underwrite self-employed professionals gives us an edge in these markets.”

SHFL is also looking to add branches this year, to the current 105. “After four years, we are looking at branch expansion... in the second half of the year, we are aiming to open 15 branches, mostly in tier 3 locations in Andhra, Telangana, Karnataka and Tamil Nadu,” he said. Mr. Duraiswamy had in May said that "the contribution from tier 2 and 3 towns in the southern market" to total business had risen to about 70% at the end of March, from about 55% a year earlier.

The expansion would initially likely be on a ‘hub and spoke model’, with the new branches starting small and working closely with the nearest branch. “But we expect each of these new locations to become full-fledged branches within 18 months of starting operations. While the 10 branches outside the South are doing well, we will continue to expand in the southern region this year and consolidate our presence in these markets before looking at further expansion outside the South,” Mr. Duraiswamy said.

In tandem, the company plans to also increase employee strength by about 300. “We are stepping up hiring this year and are looking to hire 250-300 people on a base of 800. We recruited about 170 people last year. We believe that hiring quality people will be an important factor in fast-tracking growth.” Interestingly, the company has conducted training programmes for managers to improve their interviewing skills to help identify candidates with the appropriate fit.

Asked if a looming global recession or even a slowdown in India on the back of rising lending rates could end up as a dampener for the real estate sector, Mr. Duraiswamy said: “We continue to be bullish on the long-term outlook. We do not expect consumer demand to go down in this space anytime in the near future. Our view is that the real estate sector is fundamentally strong and is poised for growth. Tier 2 towns are clearly catching up on growth and offer lots of opportunities for us.”