TransUnion (NYSE:TRU) CIBIL's Credit Market Indicator (CMI) for Q2 2023 has revealed a rise in balance-level serious delinquencies across all product categories, with the exception of credit cards and personal loans. The report indicates that the delinquency rate for consumers with at least one small-ticket personal loan increased by 120 basis points year-on-year to 5.4%. Despite this increase, MD and CEO Rajesh Kumar stated that the financial stability remains robust due to strong retail credit growth and broadly stable delinquency levels.
The report highlights that small-ticket personal loans of less than ₹50,000 account for only 0.3% of the total retail loan book size at an industry level. However, these loans have seen a significant increase in disbursals since January 2022, representing about 25% of total origination volumes. This rise in small-ticket personal loans has had a marginal impact on the overall retail loan portfolio, which includes home loans, auto loans, credit cards, personal loans, and consumption loan products.
In addition to the rise in small-ticket personal loans, early vintage delinquency trends also saw an increase in Q3 FY23 on consumption loan products compared to Q3 FY20. Lenders have flagged these rising delinquencies on small-ticket unsecured retail loans following a caution from the Reserve Bank of India.
On a positive note, the report showed that overall retail loan originations grew by 1% year-on-year during the quarter, led by semi-urban and rural consumers and consumption-led demand. However, loan originations among new-to-credit consumers fell by 4%. In Q1 FY24, more than half of consumers who availed small-ticket personal loans already had more than four credit products. The report also noted that originations among younger consumers aged 18-30 years remained steady amid changing borrower profiles.
InvestingPro Insights
TransUnion CIBIL's financial stability in the face of rising delinquencies can be understood better by looking at the real-time data and tips from InvestingPro. Despite a declining trend in earnings per share, InvestingPro Tips suggests that strong earnings should allow management to continue dividend payments. Additionally, the net income is expected to grow this year, which may offset some concerns about profitability.
InvestingPro Data reveals a market cap of $9710M USD, with a P/E ratio of -38.50, suggesting that the stock may be undervalued. The company's revenue as of Q3 2023 stood at $3779M USD, with a gross profit margin of 65.39%, indicating impressive profitability. The company's return over the last week has been significant at 10.09%, despite a fall in price over the last three months.
InvestingPro offers even more insights and tips for those interested in further analysis of TransUnion CIBIL's financial performance. These insights can be particularly helpful in understanding the company's resilience in the face of the current market trends.
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