Akme Fintrade Q4 and FY 2024 Earnings Conference Call Summary
Overview
• Date of Call: July 12, 2024
• Submission Date: July 19, 2024
• Key Executives: Nirmal Kumar Jain (Managing Director), Akash Jain (CEO), Rajni Gehlot (CFO)
Company Mission and Growth Strategy
• Focus on providing accessible loans to underserved rural and semi-urban areas.
• Plans to open 15 new branches and 25 sales points.
• Emphasis on maintaining investor trust and future growth.
Financial Performance
• FY 2023-24 Disbursement: INR 97 crores
• Current AUM: INR 426 crores
• FY 2024-25 Target Disbursement: INR 300 crores
• FY 2025 Target AUM: INR 650 crores
• Long-term AUM Goal: INR 2,500 crores by FY 2028
• NPA Rate: 3.54%
• Total Income Growth: 5.65% YoY
• PAT Growth: 27.62%
Business Model and Expansion Plans
• Hub-and-spoke model for efficiency and cost reduction.
• Current Operations: 12 branches and 25-30 points of sale across four states.
• Recent expansions in Ahmedabad and Gangapur.
• Targeting Tier 2 and Tier 3 markets.
Investor Inquiries and Management Responses
• Revenue Growth: 6% attributed to AUM increase and loan rundown.
• Heavy reliance on Rajasthan for AUM (69%).
• Strategy for gradual expansion into Gujarat and Madhya Pradesh.
• Loan approval process includes KYC checks and credit assessments.
• Digitization efforts to streamline loan processing.
Financial Projections and Capital Requirements
• No immediate need for capital increase; sufficient NOF until AUM reaches INR 1,700-1,800 crores.
• Future capital needs anticipated in three years, with potential debt raising of INR 1,200 crores.
• ROA expected to improve to above 5% in FY25; ROE target of 16-17% by FY27-28.
Asset Quality and Borrowing Costs
• Portfolio at risk: 7.18%; NPA: 3.63%.
• Average ticket size for business loans: INR 6-8 lakhs.
• Current borrowing cost: 14.5%, expected to decrease to 12.5-13% by FY25.
Conclusion
• Ongoing proposals for new loans with banks.
• Shift in business mix from 80% SME and LAP to 60% business loans and 40% vehicle loans.
• Assurance that recent state loan waivers will not impact business.
• Plans to convert sales points into branches and open additional sales points, targeting 44-45 operational points.