Sammaan Capital LtdQ1 FY23Finance

Sammaan Capital Ltd

Q1 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

Yes

Order

Capex

Yes

2 of 5 growth signals are positive.

Revenue guidance

Category 3

→Retail disbursements aim to grow from ₹7,800 Crores in FY2023 to at least ₹12,000 Crores in FY2024.
→Retail disbursements expected to average ₹800-900 Crores per month in H1 FY2024, increasing to ₹1,300-1,400 Crores per month in H2 FY2024.
→Net growth in loan book anticipated from Q3 FY2024 as disbursals reach ₹1,200-1,300 Crores per month.
→Co-lending and loan sell-downs (CLM) expected to contribute significantly, with CLM increasing from 34% of AUM in FY2023 and growing further.
→Focus on maintaining asset quality and calibrated expansion of branches and workforce to sustain growth.
→Wholesale book liquidation mostly complete; future growth expected through strategic partnerships and dedicated vehicles.
→Overall, FY2024 anticipated to be flattish in first half, followed by net growth in second half, with stronger growth in FY2025 and beyond.

Category 3

→Retail disbursements expected to grow from ₹ 7,800 Crores in FY2023 to at least ₹ 12,000 Crores in FY2024.
→Net interest income increased to ₹ 3,089 Crores, supported by asset-light model and sale of investments.
→Management targets expanding ROA from current 1.4% towards 3%+ over next 2-3 years.
→ROE expected to grow from current 7.7% to mid-teens (~15%) by FY2026.
→Cost-to-income ratio to remain above 20% through FY2024-25, then decline, supporting ROE growth.
→Net disbursements predicted to be flat in first half of FY2024, with net growth starting in second half.
→Earnings accretive asset-light model with strategic bank partnerships provides scalable and sustainable growth.
→Strong provisioning and capital adequacy (31%) underpin stable profitability.
→Continued recoveries (~₹ 400-500 Crores per quarter) contribute positively to earnings outlook.

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Yes

→Indiabulls Housing Finance has created a dedicated vehicle for wholesale lending funded by Alternative Investment Funds (AIFs) and global funds, generating returns and attracting partners.
→Over the last three years, the company has done transactions worth ₹15,000 to ₹16,000 Crores with various global funds, indicating strong fund-raising through debt partnerships.
→The management is open to both equity and debt financial partnerships but has not announced any specific new fundraising at present.
→The company is focusing on growing retail disbursements and prefers equity or debt partnerships that are specific and focused.
→No current or planned broad promoter-related debt issuances; management is confident in the current fundraising track record and partnerships.
→The reorganization and structure changes are based on investor feedback to make the company more investable and attractive for future capital.

→The wholesale book liquidation process is nearly complete with a residual pool of approximately ₹ 4,000 to ₹ 5,000 Crores targeted for liquidation over the current year.
→Retail disbursements are expected to scale up by another ₹ 300 Crores to ₹ 400 Crores net growth to start happening soon.
→Retail disbursals have grown from about ₹ 3,000 Crores last year to nearly ₹ 8,000 Crores this year.
→The goal for the current year is to disburse at least ₹ 12,000 Crores in retail loans.
→Monthly retail disbursal run-rate expected to be ₹ 800 Crores to ₹ 900 Crores in H1 FY2024 and increasing to ₹ 1,300 Crores to ₹ 1,400 Crores per month in H2 FY2024.
→Some wholesale loans will still be disbursed through the AIF vehicle in Q2 and Q3, with fund approvals expected within 2-4 months.

Yes

→The company is undertaking a reorganization to create specific entities focused on retail and wholesale lending, aiming for better capital allocation and partnerships.
→A rebranding exercise is in progress, expected to be unveiled in about 120 days, to improve corporate identity and stakeholder resonance.
→Investment in building a co-lending marketplace tech platform is ongoing to improve efficiencies, resulting in higher ROA and supporting ROE goals by FY2026.
→Focus on scaling retail disbursements steadily, targeting ₹12,000 Crores for the current year.
→The company continues to invest in institutionalization processes, ESG initiatives, and improved corporate governance standards.
→While there is potential for opportunistic large-scale wholesale disbursements requiring specialized capital, no significant strategic large-scale wholesale capital raise is planned in the near future.
→Capital expenditure on human resources and branch expansion is being carried out in a calibrated manner to ensure productivity.

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