Can
Fin Homes conducted a conference call 23 January 2024 to discuss its financial
results for the quarter ended December 2023. Suresh Iyer, MD and CEO of the
company addressed the call:
Highlights:
The
company had undertaken process changes and tightening relating to centralization
of disbursements and reconciliation, which has impacted the disbursements of
the company in Q3FY2024
The
disbursements were particularly impacted in the month of October, while they
have returned to normalcy with the monthly run rate of Rs 700 crore in December
2023.
So
the company expects to clock disbursements of over Rs 2500 crore in Q4FY2024. The
overall asset under management growth is expected at 13-14% by end March 2024.
The
company is targeting disbursements of Rs 12000 crore for FY2025.
AUM
growth is expected to accelerate to 15-17% in FY2025 and further higher to 18
to 20% in FY26
The
company had a restructured loan book of Rs 670 crore of which Rs 450 crore come
out of moratorium by end June 2023 with Rs 64 crore slippages to NPA category
by September 2023. Another Rs 200 crore of restructured loan book exited
moratorium in Q2 and contributed NPAs of Rs 30 crore in Q3FY2024.
The
company has fully recognized the pain in the restructured loan book. The
overall slippage in the restructured loan book has been inline with the estimated
level of 15% or Rs 98 crore.
The
company had created management overlay provisions of Rs 34 crore, which they
have continue to hold. So, the provisions were higher in Q3FY2024.
The
company expects normal credit cost from FY2025.
The
NPA in the non restructured loan book are in line with the normal trend and the
company expects them to reduce in line with seasonality by March 2024
The
company is expecting Rs 20 to 30 crore of decline in its NPA book in Q4FY2024, helping
to reduce the gross NPA ratio to 0.75-0.80%.
The
company has received AAA rating from ICRA in Q3FY2024, which has helped to
maintain the cost of borrowing steady.
The
repricing of loan book as helped the company to improve margins.
The
company is not expecting any further increase in cost of borrowings, while it expects
to maintain spreads of 2.6% and margins of 3.7-3.8% by March 2024.
The
company also expecting to receive NHB refinancing in Q4FY2024, which is the
cheapest source of borrowings.
The
sourcing mix from DSA channel has declined to 79% end December 2023 from 85% a
year ago. The company aims to reduce it further down to 60% in the next 2 to 3
years.
The
company has added 5 new branches in Q3FY2024, which are mostly added in the
north and the western part of the country.
The
share of southern region in the disbursement has declined to 72%. The company has
also exhibited increasing the ticket size in the Rs 20 lakh plus category.
The
company had guided at 18% cost to income ratio, but due to delay in the digital
expense the cost in ratio is expected to be at 16% for FY2024. For FY2025, the
cost to Income ratio is expected to the at 18-18.5%.
The
opex is expected to be at Rs 52-53 crore per quarter going forward. The new
customer addition stands at 4200 to 4500 every quarter.
The
company is planning to move to the quarterly reset of interest rates which is
expected to help in controlling balance transfer out.
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