Outlook of

the
Industries
 Commercial vehicle
 Indian commercial vehicle (CV)
financing industry is dominated
by NBFCs
 CV-financing NBFCs’ AUM to
grow 7-9% in FY23: ICRA
 Auto industry looks to sustain
growth momentum in 2023
 Sales of vehicles in the Indian
auto sector – across all vehicle
segments – grew 17.72% in
August 2022
 This is borne by the fact that
the industry has registered a
healthy growth of 112% YoY in
wholesale dispatches in
Q1FY23

This Photo by Unknown author is licensed under CC BY.

ICRA expects volume growth of 15-20% for M&HCV (trucks) in FY23.

The light commercial vehicles (LCV) segment started recovering

earlier than the M&HCV segment

ICRA expects the CV book of financiers to grow by 7-9% in FY23.

Fitch expects India’s commercial vehicle sales volume to grow in the

mid- to high-teens over the next few years, after recovering by 26%

A recovery in medium and heavy CVs from multi-year lows, along

with sustained growth in light CV categories, will help overall CV
volume reach close to one million units by FY24
After reporting a volume growth of 30.7% in FY22, the
commercial vehicle (CV) industry is likely to continue
on the same path and post 20-22% growth in FY23

Commercial Vehicle Sales To Increase 18-23% Next

Fiscal - CRISIL

Sales volume of medium & heavy commercial vehicles

(MHCVs) is expected to grow 37 to 42 because of
strong demand from the infrastructure segments such
as construction in construction, roads, mining, steel and
cement
  Passenger vehicle sales in India saw an
increase of 14 % in financial year 2022.
 Car sales volumes this year in India are
expected to rise 12.5% and another 4% in
2023, Moody’s Investors Service.
 By 2023,automotive sales in the country to
recover to the highs -Moody’s
Passenger Investors Service.

vehicle  Passenger Vehicle Sales Could Hit Over 38

Lakh Units In FY23: Tata Motors MD.
segment  Implementation of these new regulations
could raise the cost of the vehicles, and this
coupled with global recessionary trends are
of concern going forward in the year 2023.
 Farm and
Equipment finance

 Emission norms for farm

equipment set to get another
extension; Likely to be
implemented from Jan 2023
 Mahindra has been one of the
leading tractor players globally. In
fact, In the first half of FY2023
 1.5% interest subvention on
short-term agri loans of up to Rs
3 lakh for the financial year 2022-
23 to 2024-25 at 7 % per annum
 Rs. 2.37 lakh crore direct
payment to 1.63 crore farmers for
procurement of wheat and paddy
- budget 2022
 Microfinance profitability set to revive this fiscal.

A number of NBFC-MFIs have increased their

Microfinanc lending rates by 150-250 basis points in recent
months- Crisil
With rising demand for loans in rural India should
e Institution drive NBFC-MFIs’ credit growth, which is expected
at 25-30% this year.
As of March 2022, 30+ portfolio at risk (PAR) for
NBFC-MFIs stood at ~10%

New micro-lending norms to spur risk-based pricing,

aid profitability
 Securitization volume jumped 48% in the first six months of fiscal 2023
and crossed the Rs 75,000 crore mark

MFIs’ portfolio growth and profitability to revive in FY2023- ICRA

Microfinanc NBFC-MFIs registered an overall growth of 25% in their AUM in FY2022

e Institution NBFC-MFIs’ AUM expected to grow by 22-25% in FY2023 driven by

buoyant demand and likely increase in average ticket sizes: ICRA

The micro loan securitization volumes doubled to Rs. 14,540 crore in

FY2022
The momentum has been strong in Q1 FY2023, with micro
loan securitization of about Rs. 3,500 crore seen as against Rs. 1,460
crore in Q1 FY2022
Digital Lending Platform

India's Digital Lending

A recent EY report
Platform Market is
revealed that India has a The lending market in
estimated to be USD
fintech adoption rate of India grew 11.1% to Rs
731.22 Mn in 2022 and is
87% the highest among 174.3 lakh crore as of
expected to reach USD
all countries and March 2022, as compared
2507.55 Mn by 2027,
substantially higher than to previous fiscal year
growing at a CAGR of
the global average of 64%
27.95%.

FACE has reported that its

New digital lending norms RBI Received 13,000 members disbursed over
to change operating Complaints In FY23 so far 1.6 Cr loans totaling value
model at some NBFCs in digital lending apps of INR 14,016 Cr in Q2 FY
22-23
Indian Neo banks witnessed a 5x jump in funding last year, and the
figure is expected to hit $215 billion by 2023- EY

The current market size is estimated at $48 billion - Inc42 report

Neo bank partnerships driven by hyper-personalized products , AI-

driven efficiency in digital lending, Wealth tech for everyone. Together,
these three trends will ensure that India maintains its position as the
global leader in fintech innovation in 2023.
 MSME

In FY23 margins are

CRISIL in a report has said
expected to range
43% of India’s micro,
between 5.5-5.7%,
Bank credit is seen small and medium
however MSME margin
growing ~15% per annum enterprises (MSME) won’t
will cross the pre-
in fiscals 2023 and 2024 reach pre-Covid (fiscal
pandemic mark in FY24
2020) EBITDA margins in
and is expected to stand
FY23
between 6-6.5%.

MSMEs contribute around

According to the CRISIL
30 per cent to our GDP
report MSMEs revenue will
and have a share of 50
see moderate growth in
per cent of the income
FY23 and FY24 on a high
generated from total
base of FY22.
exports
 Credit growth for the banking sector is
likely to pick up to 14-15 per cent in fiscal
2023 from around 12 per cent in the
previous fiscal
 The asset quality in the MSME segment,
which saw the maximum restructuring,
remains a key monitorable, with gross
NPAs expected to rise in the current
financial year- Crisil
 Gross NPA ratio in banks - MSME
sector dipped from 11.3 per cent in
September 2021 to 9.3 per cent in March
2022, the bad assets in the sector remain
relatively high
 For the next financial year 2023-24 as
well, the asset quality in the MSME
segment may deteriorate, Crisil
 Gross MSME NPAs may rise to around 10-
11 per cent by March 2024 from
approximately 9.3 per cent as on March
31, 2022 - Crisil