Godrej Capital's Loan Book Expected to Reach Rs 12,000 Cr by FY24: CEO Manish Shah

The financial services arm of Godrej Industries, Godrej Capital, reached a significant milestone by turning profitable this quarter, after achieving the break-even point in the April-June period. Manish Shah, the company's Managing Director and Chief Executive Officer, shared insights into their expansion plans and financial targets in an interview.

Currently, Godrej Capital's loan book stands at approximately Rs 7,800 crores. Their initial goal was to reach a Rs 10,000 crore balance sheet by March 2024, but they are on track to achieve this by January or February, possibly closing the year at nearly Rs 12,000 crore. About Rs 1,400 crores of their total loan book are in Karnataka, with recent expansion efforts in cities like Mysore, Mangalore and Udupi.

Approximately half of their home loan book is attributed to customers buying homes from Godrej Properties, accounting for around Rs 3,800 crores out of the Rs 7,800 crores in the book. This indicates that 25 per cent of their business comes from within the Godrej ecosystem, while 75 per cent is from external sources.

Regarding expansion, they plan to increase their presence from 30 locations to 60 in the next year and 100 in the following year. This growth is expected to translate to between 125-150 branches over the next two and a half years.

Their loan portfolio mix is aimed at achieving 60 per cent focus on small business and 40 per cent on housing over the next two years. The long-term vision is to reach a loan book of Rs 30,000 crore within three to five years, with an 80 per cent focus on secured loans and 20 per cent on unsecured loans.

On the financial front, their average spreads for net interest margin range from 4-6 per cent. They have secured a significant portion of the required equity capital from their group and the rest will be sourced through financial institutions. External investors do not seem necessary at the moment. Out of their Rs 8,000 crore book, approximately Rs 6,000 crore is from borrowing and Rs 2,000 crore is equity.