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Can Fin Homes Limited Q1 FY25 Earnings Conference Call Summary
Key Highlights • Date of Call: July 22, 2024 • Submission: Transcript submitted to National Stock Exchange and BSE on July 26, 2024 • Key Executives: Suresh Iyer (MD and CEO)
Performance Overview • Disbursements: • 6% decline in disbursements in April and May • June marked the second-best month in 15 months • Target of INR 2,500 crores for Q2 and INR 10,500 crores for the fiscal year • Gross NPA: Slight increase, projected to decrease below 0.8% by year-end
Financial Challenges • Rising Expenses: • Increased costs due to IT upgrades and CSR commitments • Cost of Funds: • Higher borrowing rates affecting margins • Anticipated relief in Q2 from repricing CP borrowings
Funding and Growth Strategy • NHB Funding: • Last year's low budget for Affordable Housing Fund led to forgoing NHB refinancing • Hope for improved allocations in the upcoming budget • Loan Book Target: INR 41,000 crores by March 2025, contingent on disbursement goals
Portfolio Management • Portfolio Yield: Slight improvement noted • Disbursement Strategy: • Focus on higher-value loans and self-employed segment • Introduction of zonal offices to streamline processes
Government Schemes Impact • Credit Linked Subsidy Scheme (CLSS) and Affordable Housing Fund (AHF): • Potential to support growth but current targets do not rely on these schemes • CLSS disbursals were absent last year due to scheme discontinuation
Provisions and Asset Management • Standard Provisions: Increase attributed to ECL model calculations • Restructured Assets: Decreased from INR 670 crores to approximately INR 580 crores
Future Guidance • Disbursement Target: INR 10,500 crores for the year • Net Interest Margin (NIM): Target of 3.5% with a spread of 2.5% • Cost-to-Income Ratio: Guidance of 18% for FY'25, dependent on IT upgrade timing
Conclusion • Management remains optimistic about future performance and recovery, with a focus on affordable housing and strategic growth initiatives.
Can Fin Homes Limited Q4 FY24 Earnings Call Summary
Overview • Date of Call: April 30, 2024 • Moderator: Uday Pai, Investec Capital Services • Key Executives: Suresh Iyer (MD and CEO)
Financial Highlights • Disbursements: Increased by 23% from Q3, totaling over INR 2,300 crores. • Gross NPA: Reduced from 0.9% in Q3 to 0.82% in Q4. • Financial Ratios: • Spread: 2.67% • Debt-Equity Ratio: 7.34% • AUM Growth Target: 15% for FY25.
Q&A Session Insights • Cost of Funds: Slight increase from 7.35% to 7.4% due to tighter liquidity; offset by rising yields. • Competition: Main competitors include LIC, LIC Housing, PNB Housing, and Baja Housing. • Disbursement Trends: • No significant product segment withdrawals; minor changes to enhance portfolio quality. • CIBIL score floor raised from 600 to 650. • Operating Expenses: • Additional INR 5 crores due to IT upgrades; INR 3 crores expected to recur quarterly. • Cost-to-income ratio guidance of 18% for FY25.
Future Growth and Strategy • Disbursement Target: INR 11,000 crores for 15% AUM growth. • IT Improvements: Essential for enhancing digital onboarding and efficiency. • Loan Composition: Shift towards self-employed loans, maintaining a 70-30 ratio with salaried loans. • Direct Selling Agents (DSA): Plans to reduce reliance from 80% to 60% to lower costs.
Operational Insights • Loan Processing: Approximately 3,800 to 4,000 loans monthly, average ticket size of 22 to 25 lakhs. • Regional Performance: 72% of disbursements from the South, with Karnataka contributing 27-28%. • Interest Rates: Starting at 8.95% for loans above 20 lakhs, 9.6% for those below.
Regulatory and Risk Management • Regulatory Inspection: Annual inspection concluded without significant observations. • Fraud Recovery: 50 out of 57 identified fraudulent cases from 2022 have been repaid or taken over.
Conclusion • Management Confidence: Positive outlook on growth and operational efficiency, with ongoing efforts to enhance internal processes and reduce costs.
General Information • Date of Call: January 23, 2024 • Hosted by: Investec Capital Services • Key Personnel: MD & CEO Suresh Iyer, CFO, and other executives • Transcript Availability: On the company's website, compliant with SEBI regulations
Financial Performance Overview • Disbursement Trends: • Temporary setback due to process changes; recovery to Rs. 700 Crores monthly run rate by December. • Anticipated Q4 disbursements of Rs. 2500 Crores. • Projected AUM growth of 13% to 14% by year-end.
• Recovery Performance: • Restructured book at Rs. 670 Crores; NPAs at Rs. 68 Crores. • Expected reduction in gross NPAs to 0.75% - 0.80% by year-end. • Rating upgrade to AAA expected to lower borrowing costs.
Strategic Shifts • Reduction in DSA Dependence: Decreased from 85% to 79%. • Expansion: Opening of five new offices in northern and western India. • Cost-to-Income Ratio: Adjusted projection to around 16% from 18%.
Interest Rate Management • Quarterly Reset Policy: Implemented to enhance asset-liability management and customer satisfaction.
Analyst Queries and Responses • Disbursement Process: Shifted authority to head office for efficiency; same-day disbursement for scheduled cases. • Impact of Customer Resets: Cost reductions passed to customers; maintaining spread at 2.6%, slight decline expected. • Operating Expenses: Lower opex attributed to one-time costs; projected future opex around Rs. 52-53 Crores. • Disbursement Growth: Target of 20% CAGR over the next four years; projected Rs. 12,000 Crores in disbursements next year.
Credit Costs and Provisions • Restructured Loan Portfolio: Provision decreased from Rs. 68 Crores to Rs. 60 Crores; conservative approach to provisioning. • NPA Projections: Expected decrease from 0.75% to 0.7% by next year.
Growth Projections • Disbursement Targets: Q4 target of Rs. 2,500 Crores; potential for Rs. 2,800 Crores for 13% growth. • Long-term Growth: Anticipated CAGR of 20% over the next three to four years.
Digital Strategy and Competitive Landscape • Digital Disbursement: Focus on maintaining high-quality leads; stable mix of salaried vs. self-employed borrowers. • Branch Network Expansion: Targeting northern and western states for balanced loan distribution.
Conclusion • Future Outlook: Optimistic about growth trajectory and operational adjustments; emphasis on maintaining profitability amidst competitive pressures.
Can Fin Homes Ltd. Q2 FY24 Earnings Call Summary
Earnings Call Overview • Date: October 18, 2023 • Submitted transcript to National Stock Exchange and BSE on October 21, 2023. • Key executives present: MD and CEO Suresh S. Iyer.
Financial Performance Highlights • Disbursements: Sequential growth noted; slight year-over-year dip due to fraud incident in July. • Gross NPA: Increased marginally to 0.57%. • Restructured Book: Higher-than-expected NPA rate of 14%. • Provisions: Total provision of INR 72 crores, including 100% provision for fraud (INR 39.67 crores). • NIM: Improved to 3.62%. • Growth Guidance: Optimism for increased disbursements; maintaining guidance for 2.5% spread and 3.5% NIM.
Key Discussions During the Call • Yield and Lending Rates: Recent rate hikes had a delayed impact; slight discounts for higher ticket loans. • GNPA Concerns: Rise attributed to restructured loans; stabilization expected in future quarters. • Operational Changes: Successful implementation without significant impact; no notable branch attrition. • Cost of Funds: Flat quarter-on-quarter; some bank term loans increased, offset by lower commercial paper rates.
Growth Prospects • Disbursement Target: Aiming for INR 10,000 crores; current run rate at INR 2,000 crores per quarter. • Prepayments: Slight increase acknowledged but manageable. • AUM Growth: Projected 18% growth over the next 2-3 years; comfortable NIM of 2.5% to 3.5%.
Provisioning and Credit Quality • Provision Adequacy: INR 85 crores provision deemed sufficient for restructured loans. • Credit Quality Assurance: Minimal impact expected from slippages; recovery efforts in place.
IT Transformation and Operational Strategy • IT Enhancements: Ongoing transformation to improve analytics and CRM. • Sourcing Diversification: Reducing reliance on Direct Selling Agents (DSAs); increasing digital onboarding.
Market and Competitive Landscape • Interest Rate Sensitivity: Stress testing mechanism in place; comfortable within board-set limits. • Affordable Housing Focus: Targeting smaller projects; demand remains strong in higher ticket sizes.
Conclusion • Future Projections: Aiming for 350-400 project approvals; shifting business model to reduce DSA reliance. • Cost-to-Income Ratio: Currently at 16.25%, projected to rise to 18-18.5%. • Closing Remarks: Management expressed optimism about growth and credit quality despite challenges.
Can Fin Homes Ltd. Q1 FY24 Earnings Call Summary
Key Highlights • Date of Call: July 20, 2023 • Submission to NSE: July 26, 2023 • Key Executives: Suresh Iyer (MD and CEO)
Financial Performance • Growth Metrics: • 14% increase in disbursements • 18% year-on-year increase in Assets Under Management (AUM) • Net Interest Margin (NIM): Slight improvement noted • Non-Performing Assets (NPA): Increased by INR 30 crores due to restructured loans
Strategic Outlook • Cost Management: Potential stabilization in costs; ongoing negotiations with banks for better rates • Customer Base: No changes planned; focus on salaried individuals • Builder Tie-Up Initiative: Progress made, results expected in Q2
Portfolio Management • Restructured Loans: 19.5% of INR 475 crores slipped into NPA, lower than anticipated • Credit Cost Guidance: Conservative estimate of 0.7% for the fiscal year
Branch Expansion • New Branches: Plans to open 15 branches in FY '24; four in advanced stages • Focus Areas: Primarily urban towns, not metro areas
Market Confidence • Housing Finance Market: Positive outlook with stable demand and increased property supply • Disbursement Trends: Seasonal drop attributed to industry trends
Q&A Highlights • Provisioning Strategy: Follows ECL guidelines; management overlay may not be necessary for restructured loans transitioning to NPA • Commercial Paper Borrowings: Used for cost management, not liquidity • Cost-to-Income Ratio: Projected increase to 17.5% - 18% • Loan Book Classification: • Stage 1: INR 30,300 crores • Stage 2: INR 1,260 crores (includes restructured book) • Stage 3: INR 205 crores (NPA)
Future Projections • Loan Book Growth: Expected growth of 18% to 20% in AUM • Lending Rates: Starting at 9.6% • Direct Sourcing Strategy: Aiming to reduce reliance on Direct Selling Agents (DSAs) from 80% to 60% in 2-3 years
Conclusion • Overall Outlook: Optimistic about future growth despite competitive pressures; focus on maintaining service quality and enhancing direct business sourcing.
Earnings Call Overview • Date: May 3, 2023 • Hosted by: Investec Capital Services on April 27, 2023 • Key Management: Discussed financial performance and strategies
Financial Highlights • Disbursements Growth: 8% • Portfolio Size Increase: 18% • Gross NPA Reduction: From 0.64% to 0.55% • Cost-to-Income Ratio Improvement: From 18.32% to 16.93%
Management Insights • Asset Provisioning: Conservative measure of 25 Crores to strengthen coverage ratio • Yield Increase: From 8.87% to 9.87%, with expected NIM improvement to around 3.5% • Loan Book Growth Target: 18-20% anticipated despite slight demand dip
Branch Expansion and Customer Strategy • Branch Expansion Plans: Targeting 10-15 new branches annually • Customer Mix: 70% salaried, 30% self-employed • Direct Selling Agent (DSA) Importance: Key for sourcing loans
Financial Metrics • Current ROA: 2.17% • Current ROE: Exceeding 17% • Debt-to-Equity Ratio: Around 8, down from 9-10
Market and Demand Outlook • Housing Demand: Slight slowdown due to interest rates, but expected recovery • Credit Costs: Projected at 5-7 basis points
Borrowing and Liquidity • Borrowing Mix: Shift towards bank borrowings over commercial papers • Liquidity Coverage Ratio (LCR): Around 100%, above the required 60%
Recovery and Provisioning • Restructured Loan Book: 78% of borrowers resumed payments • Provisioning Strategy: Commitment to maintain strong coverage ratio
Succession and Hiring Strategy • Management Stability: Stable team with potential internal candidates • Hiring Approach: Open to market hiring while grooming existing talent
Compliance and Future Strategies • NCD Compliance: Currently at 17%, expected to meet 25% requirement in 2-3 years • Interest Rate Strategy: Ongoing discussions with rating agencies for potential upgrades
Conclusion • Optimism for Growth: Long-term potential in housing finance market with consistent growth targets.
Can Fin Homes Limited Q3 FY23 Earnings Conference Call Summary
Overview • Date of Call: January 20, 2023 • Moderator: Nidhesh Jain, Investec Capital Services • Key Executives: Amitabh Chatterjee (Deputy Managing Director), Apurav Agarwal (CFO)
Financial Performance Highlights • Total Assets: Increased by 20% YoY to INR 30,115 crores • Disbursements: Grew by 15% • Income: Rose by 38.65% • Operating Profit: Increased by 32.13% • NPA Ratios: Gross NPA at 0.60%, Net NPA at 0.30%
Strategic Insights • Demand for Home Ownership: Remains strong despite rising costs • Total Borrowings: INR 27,800 crores, including INR 900 crores from NHB • Debt Management: Utilizing NCDs and commercial papers to manage costs • Loan Book Repricing: 72% of loans yet to be repriced, indicating potential margin improvement
Future Outlook • Credit Costs: Expected to remain stable at 0.06% • Disbursement Growth Guidance: 18% to 20% for the year, with potential for higher growth in Q4 • Interest Rates: Raised by 145 basis points in response to repo rate hikes
Q&A Highlights • Interest Rate Environment: Lag in repricing allows for higher initial yields • Customer Reactions: No negative feedback on interest rate hikes; affordability remains manageable • Loan Book Monitoring: Repayments beginning for restructured loans; INR 48 crores in provisions against INR 1,000 crores of Stage 2 assets • Branch Expansion Plans: Targeting 5 to 7 new branches annually, with upgrades to existing satellite offices
Additional Insights • Geographical Focus: 20-22% of loan book from Karnataka; targeting growth in Telangana, Tamil Nadu, Maharashtra, Rajasthan, and Gujarat • Investment Income: Reported at INR 79 crores for Q3, up from INR 13 crores the previous year • IT Investments: INR 200 crores over seven years to enhance operational capabilities
Conclusion • Management Confidence: Optimistic about achieving over 20% growth in net interest income for FY '24 and maintaining a net interest margin of approximately 3%.