Hero Fincorp, the leading non banking finance company (NBFC), has returned to black as it announced its earnings for the period ended on December 31, 2021.
The financial services and lending company reported a profit after tax (PAT) of Rs 133.34 crore in the December 2021 quarter as against a net loss of Rs 196.45 crore in the corresponding period previous fiscal.
Incorporated in 1992 as Hero Honda Finlease Limited, Hero Fincorp changed its name after the ‘Hero Honda’ was completely owned by Hero Motocorp after the exit of Honda Motor Company from the joint venture of the two. Currently, Hero Motocorp owns more than 41 percent stake in Hero Fincorp.
Hero Fincorp is engaged in the business of consumer finance and commercial lending. Its wholly owned subsidiary – Hero Housing Finance Limited – is engaged in the business of providing housing loans. The company has been rated as AA+ and stable by rating agencies such as CRISIL and ICRA.
Consumer financing includes financing Hero MotoCorp two wheelers, loyalty customer loans (top up loans for existing customers) and providing loans against property. It is a captive finance company of Hero MotoCorp, India’s largest two wheeler vehicle manufacturer.
Shares of Hero Fincorp are trading at Rs 1,050 in the pre-IPO market and the scrip reached an all time high of Rs 1,100 a few months back. The tepid sentiment of over NBFCs are impacting the counter but the company is a pure steal at current prices, thanks to its sound balance sheet and robust parentage.
The commercial lending side provides Indian corporates with a wide portfolio of financing products which include working capital loans, machine loans among others. In 2014, it ventured into loans against property, loans for small and medium enterprises and commercial loans.
Hero Motocorp’s NBFC arm reported a marginal rise of 7.5 percent in the total income from operations to Rs 1,151.53 crore in Q3 FY22 from Rs 1,070.44 crore in Q3 FY21.
In the financial year 2020-21, Hero Fincorp became India’s top two-wheeler financing company with more than 50 lakh customers and a loan book of close to 20,000 crore. The company has an employee strength of more than 7,500 headcounts.
At present, the company has close to 2000 retail financing touch-points across Hero MotoCorp’s network, and have partnered with over 2000 satisfied corporate clients. The company marks its presence at more than 1,000 dealerships spread across 1,900 cities, towns and villages.
Going forward, it plans to continuously expand our offerings and geographic presence, whilst offering class leading financial services to all sections of our society.
On an operations basis, the company reported a positive EBIT of Rs 180.44 crore in the given quarter, which was on the negative side in the same quarter previous year. The company reported an negative operating income of Rs 261.99 crore in the December 2020 quarter.
In 2020, the company launched its instant loan mobile app named ‘SimplyCash’ and entered the instant cash loan segment. Millennials across 90 cities in India could use the app and avail instant cash loans as per their need.
Thanks to positive bottomline and robust topline, the earning per share of the company, on both basic and diluted basis, jumped to 10.5, which was around -16 during the comparison period.
Net worth of the company increased more than 13 percent to Rs 3,946.30 crore from Rs 3,480.12 crore during the period. Also, debt to equity ratio of the company improved marginally to 4.7 from 4.76 earlier.
For the financial year ended on March 31, 2021, Hero Fincorp reported a net profit of Rs 70.62 crore with a total income from operations at Rs 4,091.64 crore. It reported an EPS of little less than 6 during FY 2020-21.
More about Hero Housing Finance
Company’s wholly owned subsidiary, Hero Housing Finance has shown a robust growth in the last few years. In the first year of its operations, FY 2018-19, the company disbursed loans worth Rs 556.75 crore to the customers.
Hero Fincorp had invested Rs 200 crore in Hero Housing Finance by subscribing 20,00,00,000 equity shares of face value of Rs 10 each on the rights basis.