Although demand for construction and mining equipment has started picking up, Srei Equipment Finance is focusing on growing its diversified business for balanced and risk-adjusted growth.
The company, a market leader in infra equipment finance space, expects incremental growth in the next three years to come from the diversified businesses — used equipment finance and financing healthcare, IT and agriculture equipment.
“Good balance in infra and non-infra equipment financing will give us a good and balanced growth. Balanced diversification and distribution will help the company achieve a risk-adjusted growth, which is our strategy,” Srei Equipment Finance CEO DK Vyas told FE.
At the end of June quarter, total disbursements of the NBFC, a 50:50 JV between Srei Infrastructure Finance and French major BNP Paribas, stood at R1,749 crore, of which around 17% was to the diversified areas. The company expects about 30% of its total disbursement in next three years to be to the newly-developed businesses.
Currently, in new infrastructure equipment finance, its market share is 30%. “We want to maintain that market share. This will continue to be our key focus area, but learning from the downturn in the economy, we have also started diversifying into IT, healthcare, agriculture and pre-owned equipment financing,” Vyas said.
Agriculture and pre-owned equipment verticals, which are low-risk and high-return businesses, will become key profit drivers for the company, while IT and healthcare with lowest cost-income ratio will help it diversify risks. And infra equipment finance will continue to provide top-line growth. This fiscal, the company aims to disburse R1,000 crore to used equipment segment. Disbursement was about R600 crore in the last financial year.