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Yields, CoF and Margins

* Incremental CoB has gone up by ~15bp and company has increased the incremental yields by ~35bp in Jun'22.

* Expects the overall weighted average borrowing costs to go up by ~20bp in FY23.

* Expects margins to remain stable since increasing cost of borrowings can be partly offset by higher incremental cost of lending and lower negative carry from excess liquidity.

Liquidity

* Board has suggested that the company can look at some debt buy-back arrangement so that liquidity slowly gets phased out

* From 2QFY23 onwards, it will be looking to reducing the excess liquidity on the balance sheet

Demand outlook

* New vehicle prices have gone up by 30-35% over the last three years because of higher steel prices.

* Demand momentum in used vehicles is likely to sustain; if the new vehicle prices continue to increase then customers would prefer to buy used vehicles.

* Demand for dumpers and construction equipment (CE) is very high.

Can inflation or higher fuel prices lead to higher delinquencies?

* The company does not foresee higher delinquencies because of higher inflation. Vehicle Finance is fixed rate lending and there is predictability of EMI amount during the tenure of the loan

* Increase in fuel prices are passed on the end consumer through increase in freight rates. Truck operators do not have to bear the cost of increase in fuel prices

Asset Quality

* LGD stood at 43.73% (v/s 44.68% in 4QFY22)

* Remaining management overlay provisions of INR18.4b will be utilized over the next 3-4 quarters and guided for credit costs in the range of 2.0-2.1% in FY23

Others

*  Total employees count at 25,720 as on Jun'22.

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