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Aavas
Financiers conducted a conference call 04 August 2023 to discuss the financial
results for the quarter ended June 2023. Sachinder Bhinder, MD&CEO of the company
addressed the call:
Highlights:
The company has recorded
23.2% growth in the asset under management to Rs 14650 crore end June 2023.
The company is undergoing an
accelerated Digital Transformation with adoption of best-in-class technologies
like SalesForce (LOS), Oracle Flexcube (LMS), and Oracle Fusion (ERP). It has successfully
rolled out and stabilized the first phase of LOS system across all branches in
Q1FY2023-24. Phase II is underway.
The technology transformation
led moderate disbursements for quarter ended June 2023. However, post stabilization
of new system in May 20233, the disbursements have jumped 17% in June 2023 over
May 2023.
The company continues to
invest in people and technology for the medium and long term.
The company has added 2 new
branches in Q1FY2024 and has 348 branches spread across 13 States.
The company has been able to
maintain spreads despite competitive pricing pressures. It has further increased
PLR by 40 bps effective from 5 April 2023.
The company is well
capitalized with CRAR of 47.32% end June 2023 and sufficient balance sheet liquidity
of Rs 3182.7 crore in the form of cash & cash equivalents and un-availed
sanctions.
The incremental borrowing
during Q1FY24 stood at Rs 1382.6 crore borrowed at a rate of 8.01%.
Portfolio health remains
strong with further improvement. The company continues to maintain razor sharp
focus on governance, asset quality, profitability, leveraging technology, and
creating superior customer experience.
The operating expenses were elevated
on account of head count increase, ESOPs and tech related cost.
The cost of borrowing stood
at 7.66% against the yield on portfolio at 13.26% leading to spread of 5.6%.
The number of live account
increased 21% to 192446 end June 2023.
The employee base stood at 5700
end June 2023.
The borrowings of the company
stood at Rs 13382 crore of which 46% were term loans, 24.9% were securitization, 21% NHB borrowings and 11%
debt capital market.
The 1 day overdues have
declined to 3.68% end June 2023 from 4.67% end June 2022.
Gross Stage 3 is 1.00%
comprising 0.87% of above 90 DPD assets and 0.13% of up to 90 DPD assets
(categorized as GNPA/Gross Stage 3 on account of RBI notification) and Net
Stage 3 is 0.73% end June 2023.
Out of the restructured loans,
the company has classified Rs 84 crore of loans as stage 2 assets making
required provisions. Of this Rs 63 crore is within the 0 to 30 days DPD bucket.
The overall ECL provisions including the covid provisions were at Rs 76.5 crore.
The company is well placed
to maintain its industry leading asset quality.
The company has raised 20%
of its borrowing from NHB in Q1FY24. Out of the total borrowing program, the NHB
sanctions stands at 20%. So the mix of borrowing from NHB will continue to
remain same at 20 to 22% helping to maintain stable cost of borrowing.
The company expects to
maintain healthy net interest margins in the coming quarters.
The loan growth is expected
to be maintained at 20-25%.
The balance transfer outside
stood at 1.4% in Q4FY2024 and 0.5% per month.
The company expects to maintain
opex to AUM ratio for FY24 similar to FY23 level of 3.68%.
The company has offered an increment
of 8 to 9% to employees in Q1FY2024.
The company intends to maintain
the home loan mix at 65% and the non home loans at 30 to 35%.
The yield on the mortgage loan
to MSME stands at 15% and the company follows cash flow based underwriting.
The business from
Maharashtra, MP and Gujarat stands at 15-16% and Rajasthan at 30-35%.
The company aims maintain RoA
at 2.5 to 3% and RoE at 15 to 20%.
The company expects opex to AUM
saving of 25 bps every year from next year and reduce opex to AUM ratio to 3%
in next 3 years.
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