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Conference Call Overview • Date: August 2, 2024 • Submitted transcript to National Stock Exchange and BSE on August 7, 2024 • Key management present: MD and CEO K. Swaminathan
Company Performance Highlights • Profitability: Steady improvements despite challenges (staff relocations, elections, heat waves) • Disbursements: INR 680 crores (same as previous year) • Sanctions: Slight increase to INR 727 crores • Loan Book Growth: 8.3% year-on-year to INR 13,701 crores • GNPA: Decreased to INR 583 crores from INR 695 crores • Net Profit: Increased by 18.35% to INR 105.4 crores • Net Interest Margin: 5.14% • Future Goals: Expand branch network, target AUM of INR 15,000 crores by March 2025
Management Responses to Concerns • Stagnant Disbursements: Focus on quality over quantity; cautious growth due to past asset quality issues • Growth Target: Aiming for 11-12% growth, with a target of INR 3,600 crores in disbursements for the year • Dividend Policy: Increased dividends, future distributions to be decided by the board
Strategic Initiatives • Loan Disbursement Strategy: Enhancing sourcing channels (DSAs, DSPs, new "Connectors") • Branch Expansion: Plans to open 30-40 new branches • Performance Metrics: Specific targets assigned to branches based on potential
Financial Guidance and Risk Management • GNPA Target: INR 450 crores by year-end • Policy Changes: Ongoing liberalizations to stimulate growth • AUM Growth Strategy: Targeting INR 20,000 crores in two years, with a shift in branch contributions outside Tamil Nadu
Talent Acquisition and Market Position • Recruitment: Ongoing efforts to attract experienced talent with competitive salaries • Sales Team: Approximately 210 members currently, with recruitment in progress • Market Competition: Rising costs may impact margins, but confidence in future performance remains high
Conference Call Overview • Date: May 16, 2024 • Submitted transcript to National Stock Exchange of India and BSE on May 21, 2024 • Key personnel: K. Swaminathan (Managing Director and CEO)
Financial Performance Highlights (Q4 FY '24 and FY '24) • Disbursements: Increased by 12.7% to INR 3,135 crores • Net Profit: Grew by 32% to INR 395 crores • Gross Non-Performing Assets (GNPA): Reduced to 4.1% of Assets Under Management (AUM) • Net Interest Margin (NIM): Maintained at 5.23%
Future Goals and Projections • AUM Target: INR 20,000 crores by 2027 • GNPA Reduction Goal: Below 2% by 2027 • Disbursement Growth for FY '25: Targeting INR 3,600 to INR 3,800 crores, with potential to reach INR 4,000 crores • Projected PAT Growth: Between INR 450 crores and INR 475 crores • Loan Portfolio Growth: Expected to rise from INR 13,500 crores to INR 15,000 crores
Operational Plans • Outlet Expansion: Increase from 210 to 250 by March '25 • Focus on Collections: Emphasis on overdue segment and enhancing collection team • Geographic Expansion: Considering entry into Northern India while focusing on existing markets
Employee and Operational Costs • Employee Expenses: Projected increase of 10-12% for FY '24-25 • Phase 2 Transformation Project: Estimated cost of INR 40 crores, with INR 22 crores already spent
Q&A Highlights • Recovery Efforts: Projected net reduction of INR 100 crores in GNPA for FY '25 • Return on Assets (ROA): Estimated at around 3% • Cost-to-Income Ratio: Expected to maintain at 24% • Quality of New Loans: Low NPAs (0.24%) reported in recent disbursements
Conclusion • Management expressed confidence in financial performance and recovery efforts while addressing operational costs and employee expenses for FY '25.
Company Performance • Date of Call: February 13, 2024 • Key Executives: MD and CEO K. Swaminathan • AUM Target: • Aim for INR 20,000 crores by 2027 • Potential growth to INR 25,000 crores with favorable external factors • Q3 FY '24 Results: • Disbursements increased by 9% to INR 759 crores • AUM rose by 8% to INR 13,185 crores • GNPA decreased to 4.7% • Net profit grew 23% year-on-year to INR 99 crores
Growth Concerns • Disbursement Guidance: Likely to miss INR 3,600 crores, projecting around INR 3,200 crores • Future Growth Plans: • Targeting 12% growth next year, increasing to 14% and 17% in subsequent years • Potential acceleration to over 20% with government support
Non-Performing Assets (NPAs) • Current Strategy: • Use auctions to encourage settlements • Aim to reduce gross NPAs from 4% to 2% by 2027 • Dedicated legal recovery team established • Q3 Recoveries: INR 76 crores against slippages of INR 57 crores
Financial Metrics • Return on Equity (ROE) and Net Interest Margins (NIMs): • Expected benefits from excess provisions • Projected NIM of at least 5.1% for FY '25 • Credit Costs: Anticipated to remain low due to strong performance in new loans
Operational Strategies • Branch Expansion: Plans to open 40 new centers, primarily in Tamil Nadu • Sales Staff Increase: Potential increase from 200 to 250-300 staff based on growth trends • Technology Investments: New software systems to enhance operations
Future Outlook • Loan Growth: New loan book performing well with minimal slippages • Dividends: Board to consider in future discussions based on ROE and provisions • Regulatory Impact: Not significantly affected by new RBI regulations on processing charges
Conclusion • K. Swaminathan expressed confidence in achieving growth targets while addressing concerns about NPAs and operational strategies to enhance performance.
Earnings Highlights • Disbursements: ₹797 crores (up 7% YoY) • Sanctions: ₹860 crores (up 4% YoY) • Assets Under Management (AUM): Increased to ₹12,922 crores • Gross Non-Performing Assets (GNPA): Decreased to ₹637 crores (4.9% of AUM) • Profit After Tax: Rose 38% YoY to ₹98 crores • Return on Assets (ROA): 3.1% • Return on Equity (ROE): 16.1%
Management Insights • Growth Targets: Confidence in achieving targets; no revision until after Q3. • Stage Two Assets: Decreasing, expected to reach around 10% by quarter-end. • Loan Growth: Low growth attributed to higher NPAs; focus on improving home loan growth.
Operational Strategies • Branch Expansion: New SAT centers in Karnataka; plans for Andhra Pradesh, Telangana, and Ahmedabad. • Sales Team Development: 200 sales personnel, with training initiatives contributing to 20% of new business. • Technology Investments: ₹50 crores budgeted for transformation; ₹20 crores already spent.
Financial Performance • BT-in: ₹68.7 crores • BT-out: ₹38.9 crores • Slippages: ₹23 crores • Average Lending Yield: ~11.5% • Incremental Cost of Funds: ~8.5%
Future Outlook • Growth Projections for FY2025: Targeting 15-20% growth, pending board approval. • High Stage Two Asset Ratio: Aiming for reduction to single digits by 2024 or 2025. • Operational Stability: Expectation of stable operational expenses and cost-to-income ratio of 23-24%.
Q&A Highlights • Concerns on Loan Size: Average ticket size stable at ₹12 lakhs; incremental size around ₹17 lakhs. • NHB Loans: Recent applications for loans after meeting covenants. • Competition: Banks primarily compete for BT-outs; various HFCs for new loans.
Conclusion • Management reassured stakeholders of steady growth and commitment to performance improvement in the second half of FY2024.
Key Financial Highlights • Disbursements: Increased by 7% to Rs. 684 crores. • Sanctions: Rose by 5% to Rs. 726 crores year-on-year. • Assets Under Management (AUM): Grew to Rs. 12,655 crores. • Gross Non-Performing Asset (GNPA) Ratio: Stood at 5.5%. • Net Profit: Reported at Rs. 89 crores, an increase of 8.5% quarter-on-quarter and 43.5% year-on-year.
Growth Targets and Strategies • Disbursement Goals: Targeting an increase from Rs. 3,000 crores to Rs. 3,600 crores this year. • AUM Target: Aiming to grow from Rs. 12,400 crores to Rs. 14,000 crores by year-end. • Branch Expansion: Plans to open 6-7 new offices in Tamil Nadu and 10 branches elsewhere, targeting over 200 offices by year-end. • Focus on Organic Growth: Open to profitable acquisitions while enhancing operational efficiency through structural changes.
Loan Portfolio and Asset Quality • Loan Classification: Home equity segment includes various loan types, not just LAP. • NPA Reduction Goal: Aiming to reduce NPAs by Rs. 100 crores this year. • Borrower Profile: Stable, with a potential shift towards more aggressive lending in salaried segments.
Financial Management and Employee Costs • Employee Costs: Increased due to salary revisions and cost-of-living adjustments. • Net Interest Margins (NIMs): Targeting maintenance around 4.7% to 4.8%. • Credit Costs: Expected to be Rs. 25 crores for the year.
Capital Efficiency and Future Outlook • Concerns Raised: Need for improved capital utilization and productivity. • Stage-II Loans Management: Efforts to stabilize collections and reduce Stage-II loans below 10%. • Optimism for Recoveries: Management expects future recoveries and improved capital utilization.
Conclusion • Home Equity Portfolio: LAP constitutes only 34% of the total book. • Future Plans: Additional outlets planned, with a focus on maintaining credit costs and enhancing growth strategies.
Key Highlights • Date of Call: May 29, 2023 • Submission to BSE and NSE: Transcript submitted on June 2, 2023 • Management Present: K. Swaminathan (Managing Director) and key management members
Financial Performance • Disbursements: INR 835 crores in Q4, highest in recent quarters • Assets Under Management (AUM): Increased to INR 12,449 crores • Loan Sanctions: • 30% quarter-on-quarter increase • 72% annual increase • Non-Performing Assets (NPA): • Gross NPA: 5.8% • Net NPA: 3% • Profitability: • Net Interest Margin (NIM): 5.1% for Q4, 4.8% for the year • Profit After Tax (PAT): INR 296 crores (55% increase)
Future Outlook • Growth Targets for FY '24: • 20% increase in sanctions and disbursements • 12% increase in AUM • Reduction of GNPA by INR 100 crores • Interest Rate Management: Shift to quarterly resets to manage costs
Operational Strategies • Branch Expansion: Plans to open 10 new branches and 10 satellite centers • Credit Cost Guidance: Maximum expectation of INR 25 crores for FY '24 • Borrowing Profile: • Total borrowings increased from INR 9,688 crores to INR 9,914 crores • Weighted average cost of borrowing rose to 8.08%
Asset Management • Restructured Book: Total of INR 700 crores restructured, with INR 400 crores remaining • Margin Management: • Improvement due to increased Minimum Lending Rate (MLR) • 20 bps compression in spreads
Analyst Inquiries • Growth Prospects: • Internal target of 12% growth • Addressing staffing and technology gaps • Regional Performance: Challenges in Gujarat and Kerala attributed to competition • Balance Transfers: • 3% of opening AUM for BT outs, expecting net growth from BT ins • Provisioning Levels: • Stage 1: 0.5% • Stage 2: ~13% • Stage 3: 49%
Conclusion • Optimism for FY '24: Confidence in growth trajectory and management of NPAs • Customer Engagement: Competitive interest rates improving customer perception and attracting new clients
Conference Call Overview • Date: February 15, 2023 • Submitted transcript to BSE and NSE on February 20, 2023 • Key management members discussed Q3 FY '23 performance
Company Performance Highlights • Loan Sanctions: 51% year-on-year increase • Disbursements: 57% rise • Gross Non-Performing Asset (GNPA) Ratio: Improved to 6.15% • Profit After Tax (PAT): Surged 43% year-on-year • Future Growth Projections: • 25% growth in disbursements for FY '24 and '25 • 15% growth in assets under management (AUM)
Investor Feedback • Concerns Raised: • Stock price not reflecting strong performance • Adjusted loan book guidance from Rs. 13,000 crores to Rs. 12,500-12,600 crores • Customer attrition and rising cost-to-income ratio
Management Responses • K. Swaminathan's Insights: • Confidence in market recognition of efforts • Manageable customer attrition despite competitive pressures • Increased costs attributed to COVID-related expenses and legal costs
Non-Performing Assets (NPA) Management • Target of Rs. 700 crores for the quarter with NPA percentage potentially below 6% • Aim to reduce NPA below 4% by March 2024 • Monitoring newly added framework accounts
Asset Under Management (AUM) and Borrowing Costs • No recent loan pool acquisitions; open to future opportunities • Fresh slippages: Rs. 88 crores; recoveries: Rs. 124 crores • Rising borrowing costs due to bank MCLR hikes, but maintaining net interest margin around 4.5%
Customer Retention Strategies • Competitive interest rates and top-up products to combat attrition • New IT system expected to enhance digitalization and customer engagement
Regulatory and Board Updates • No fees for customers exiting loans due to regulatory guidelines • Stable board composition providing valuable guidance
Technology and Asset Quality • New tech platform costs estimated at Rs. 50 crores • Confidence in adequate provisions and monitoring of overdue portfolio
Closing Remarks • Commitment to improved performance moving forward • Gratitude expressed for participant engagement and questions