Highlights:

The company stressed the need for a balanced and prudent growth strategy.

Despite increased competition, the company has recorded a net profit of Rs 393 crore in Q3FY23 up 50.8% over the year ago quarter driven by profitability in gold loans and the turnaround in microfinance business.

Gold loan AUM stands at Rs 18614 crore showing yoy decline, but remained steady sequentially.

The consolidated AUM has reached Rs 31883 crore end December 2022 rising 4.9% over the year ago.

The microfinance subsidiary Asirvad posted 22% growth in AUM to Rs 8653 crore and a profit of Rs 70.5 crore in Q3FY23.

The company expects the share of microfinance in the overall profit to go up ahead.

The vehicle finance business recorded 40% increase yoy with an AUM of Rs 2112 crore. Home loan AUM increased 23% to Rs 1005 crore.

The strategy of diversifying into other sectors is gaining pace with the policy of becoming a well-diversified NBFC, and this rebalancing is already reflected in the December 2022 quarter results.

The company has also decided to enter niche areas like financing, healthcare professionals and small hospitals owing to good potential. The company has already disbursed Rs 500 crore.

MSME and personal loans are another area where the company wants to increase presence to arrive at the right mix of gold and non-gold products.

ROE on a consolidated basis was 17% and ROA was 4.2% for Q3FY23.

The leverage is currently at 2.9 times.

GNPA reduced to 1.61% end December 2022 from 1.95% end September 2022.

Cash and cash equivalents on a consolidated basis were Rs 4879 crore and undrawn bank line was Rs 4761 crore.

CP exposure of the company is nil in the standalone entity.

Standalone borrowing cost has gone up by 59 bps after the repo rate hike of 225 bps.

The gold loan business constitutes 58.4% of consolidated AUM, whereas the remaining 41.6% comprises microfinance, loan against vehicles, housing, and SME finance.

Gold loan AUM has declined 3% qoq and down by 9% yoy. The yield improved to 22.4% against 21.9% in Q2FY23.

The company added 4.8 lakh new customers in Q3FY23. The total number of gold loan customers stood at 23.7 lakh.

Online gold loans continue at 47% of the total gold loan book.

Average ticket size was at Rs 55015 and the tenure average duration is 73 days. LTV is at 61.5%.

Asirvad AUM increased 13% qoq and 22% yoy to Rs 8654 crore including gold loan AUM of Rs 548 crore. Expect further reduction in credit cost and return to pre-COVID provisioning levels over coming quarters.

The collection efficiency from MFI business during the quarter was at 104% and disbursements was Rs 2382 crore.

Cumulative ECL provision in Asirvad is Rs 444 crore. Net NPA stands at 1.7%. The CRAR of Asirvad stands at 21.6%.

Vehicle Finance business AUM increased 12% qoq and 40% yoy to Rs 2112 crore. The collection efficiency was at 102%. GNPA came down to 3.1% from 3.6%.

Home loan business AUM increased 9% qoq and 23% yoy to Rs 1005 crore. It operates from 74 branches and reported a profit of Rs 2.6 crore in Q3FY23 and Rs 12 crore for 9MFY23. Collection efficiency was 100% and GNPA at 5.4%.

Loan to MSME and others stands at Rs 1526 crore. Collection efficiency is over 100% and GNPA at 1.2%.

The capital position is strong, and the company is well capitalized with a CRAR of 32.86%.

On the gold loan, up to 1 lakh is 44%, 1-2 lakh is 23%, 2-3 lakh is 10%, 3-5 lakh is 8% and above 5 lakh is 15%

Gold loan RoA is 6%, standalone RoA is 5.2% and the consolidated RoA is 4.2%. Standalone includes vehicle finance, MSME and on-lending to other NBFCs.

The gold loan actions stood at Rs 353 crore in Q3FY23.

The company aims to achieve consolidated AUM growth of 20% per annum and RoE of 20% in a few quarters.

The company aims to maintain yield at around 21%.

The net interest margin would remain somewhere in the present range.

The company has redeemed the high-cost borrowing of US$300 million bonds in January 2023.

The share of gold loan stands at 50% and the company expects in the next couple of years the loan mix between gold and non-gold would be 50-50.