Highlights:

The company has completed eight quarters since the new management has taken charge.

As an institution, the company had the best financial year in FY2024. The company had the best quarter and the best month in March ever in the Company''s history.

The larger objective of staying on course to deliver the Vision 2025 objectives.

Vision 2025

The company had articulated the vision for three years up to FY25. With two years done of the three, the company is content with the fact that the company is very near to most of the targets that the company had set.

Number of branches: The company had set a target of 1,500 branches by the end of 2025 and it is already at 1,642 branches, which is 142 branches more. This had its impact on the cost.

Customer acquisition focus: The focus on customer acquisition led growth continues. The company expects that the growth will come more through new customer acquisition and had targeted a 4 million customer base by the end of FY25. The company has touched a customer base of 3.32 million by end March 2024 and it''s on track to achieve the target.

Geographical concentration mitigation: In the microfinance sector it is very critical to mitigate the concentration risk. The company had stated intent of mitigating the concentration risk by ensuring that the company increased distribution in areas where the company is not present and moderate focus in existing. Accordingly, the company has reduced the share of top two states to under 14% from upwards of 17.5% to 18% two years back. The company is on course to achieve a target of no single state to be more than 13% by the end of FY25.

Weekly model: This was a change that the company desired to bring in the distribution model in Spandana. In an effort to move to the weekly based JLG model of microfinance, the company opened 429 new branches during the course of the year which had a weekly repayment model.

In Q4FY2024, about 21% of the disbursement was contributed by the weekly branches.

The collection efficiency continues to be above 99% in those branches.

Focus on muted ticket sizes (average indebtedness) and Shorter tenure loans: There is a strong focus on muted ticket sizes and more importantly, the average indebtedness at the customer level and shorter tenure loans.

The ticket sizes are 8% to 16% lower than what is being offered. Maximum ticket size that the company offers is 80,000 to any customer, which is probably one of the lowest offered in the industry.

The company continues to tread the path of being a responsible lender ensuring that the loans the company gives to borrowers are sustainable. Average customer indebtedness was about 36,000, which is 15% to 33% lower than the industry.

Other priorities in terms of people, in terms of technology, in terms of processes and refining the processes are perfectly on track.

The company as an institution continues to invest in technology, which the company believes is the path to optimize growth and efficiencies.

The company continues to digitize processes, ensure minimum breaks in customer journey, and most importantly, create a fully digitized environment for loan officers to service customers in the most efficient manner.

Financial performance

The company received a new rating, a rating of A+ Stable from CARE in Q4FY2024, which is the highest rating received so far by the Company.

The company disbursed Rs 3970 crore in Q4FY2024, up 56% qoq and 30% yoy. The sequential growth of sharp 56% was on account of muted Q3FY2024.

For the full year FY2024, the company disbursed Rs 10688 crore, up 32% over FY2023.

The AUM of the company has surged 15% qoq and 41% yoy to Rs 11,973 crore end March 2024.

The company added almost 1.4 million customers in FY2024 in FY24, up 59% over FY2023.

New customer acquisition surged 30% to 4.4 lakh in Q4FY2024, raising the total customer count to 3.3 million end March 2024. The disbursement to new customers grew by 62% and existing customers by 9%. The company has raised the provision coverage on NPAs to 80%.

GNPA declined 11 bps over the previous quarter to 1.5%. NNPA was 0.3%, a 17-bps decline over the previous quarter.

Microfinance:

With every passing quarter, the company is improving and the quality of liability mix also is improving.

The borrowing surged 81% to Rs 10441 crore in FY2024.

The company borrowed Rs 3428 crore in Q4FY2024, up 50% over Q3FY2024.

Marginal cost of borrowing was 11.8% in Q4FY2024, down 37 bps over Q3FY2024.

The company now has a more healthy borrowings mix with the bank''s contribution increasing to 52% of the total borrowings. The company aims to further raise the share of bank borrowings to 65% by March 2025, which would drive the cost of funds down.

NIMs improved 128 bps qoq to 14.6% in Q4FY2024 from 13.3% in Q3FY2024. NIM stood at 14.1% in FY2024.

Guidance for FY25

The company will continue to pursue the agenda of financial inclusion and driving growth through the year on philosophies.

FY2025 is all about optimizing channels and unlocking productivity across the organization.

The new business lines will scale up with the focus on capitalizing on the opportunity. However, the company will be very careful and cautious.

The company targets AUM growth of 20%-25% for FY2025 to take the AUM close to Rs 14500-15000 crore.

The company aims to raise the AUM to Rs 28000 crore by FY2028, translating to growth of 22%. So, the company is comfortable with a 20% to 25% growth.

The credit cost will be in the range of about 2%. The credit cost will be elevated in H1FY2025 and moderate in H2FY2025.

The cost-to-income ratio is expected to be in the range of 35-40% and OpEx to AUM of 6- 6.25%.

The company is targeting ROAs of upwards of 4.5%.

The security receipts book of the bank stands at Rs 112 crore, while the company is carrying Rs 34 crore of provisioning. The company expects to achieve recoveries of the rest of the securities receipt book.

Investments in the new businesses will continue in the next year as well. However, the microfinance business should start delivering a lot more productivity and a lot more efficiency.

Criss Financial

The company has rolled out two product lines - loan against property and nano enterprise loans in FY2024.

The loan against property obviously is a secured line of business.

The nano enterprise loans are loans to shopkeepers in the range of Rs 60000-90000 in selected identified geographies, and the company has made decent progress.

The business is under a subsidiary with a separate set of branches and employees.

The focus in FY2024 was on testing the product and process in one state, establishing technology solutions, hiring talent, creating the right distribution network and then to expand to other geographies.

Over the last one year, the company has established a footprint in five states namely Rajasthan, Madhya Pradesh, Andhra Pradesh, Karnataka and Tamil Nadu with the operationalization of 62 branches.

The company ended FY24 with over 3,000 customers and the company has created a book of Rs 52 crore AUM.

The company has also added about 700 staff for this new business line, which has led to some spike in cost.

The average ticket size on the Micro LAP is about 4 lakh. The company sees a lot of potential in this segment and intends to capitalize on this.