SRG HousingQ1 FY22
SRG Housing Q1 FY22 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹156P/E: 7.2Market Cap: ₹245 CrSector: Finance
Management growth scorecard
Revenue
Category 3
Margin
Category 3
Fundraise
Yes
Order
N/A
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 3- SRG Housing Finance aims to grow its Assets Under Management (AUM) to Rs. 500 crore, Rs. 750 crore, and eventually Rs. 1,000 crore, with a current focus on reaching Rs. 500 crore before FY23.
- Disbursements target is Rs. 15-20 crore per quarter (post-COVID normal), aiming for Rs. 350-375 crore AUM by FY22 end.
- The loan book stood at Rs. 322.30 crore in Q1 FY22, up from Rs. 277.09 crore last year.
- Disbursements are improving, with Rs. 6.84 crore in Q1 FY22 against Rs. 4.47 crore the previous year; new sanctions are about Rs. 16-17 crore.
- Continuous focus on expanding branch network and increasing sales teams to support growth.
- Technology and operational improvements (cloud migration, digitization of loan processing) to enhance turnaround time and customer experience.
- Equity raise planned (Rs. 50-100 crore) ahead of rising business volumes to support scale-up and maintain financial stability.
- Asset quality remains a priority, with effective recovery and counseling processes in place to minimize NPAs.
See what SRG Housing management said on margin guidance — free account, 30 seconds.
Fundraise plans
Yes- SRG Housing Finance is planning to raise equity between Rs. 50 to 100 crore to support future growth and fund expansion.
- The mode of equity raising is yet to be finalized and could be through public issue, rights issue, private placement, preferential allotment, QIP, or a combination.
- Equity raising is planned well in advance, approximately 4 to 6 months before the actual need to support business scaling.
- There is no immediate equity raise timeline fixed but the company aims to prepare in advance for increasing the loan book to Rs. 500-700 crore.
- On the debt side, the company currently has a gearing ratio of around 2.85x and plans to increase borrowings up to 6-7 times of equity as the loan book grows.
- Banks show confidence with no liquidity issues up to Rs. 500 crore AUM, and funding proposals are ongoing.
See what SRG Housing management said on order book — free account, 30 seconds.
Capex plans
Yes- SRG Housing Finance is planning an equity raise between Rs. 50 to 100 crore to support future growth and expansion.
- The mode of raising equity may include public issue, rights issue, private offerings, preferential allotment, QIP, or a combination thereof.
- The timeline for the equity raise is not finalized but planned well in advance (4-6 months lead time) to support business growth.
- The company is focused on strengthening its technology infrastructure, including shifting data to cloud (AWS) to enable digital operations and improve customer experience.
- Expansion is underway with new recruitments (78 new employees in Q1) and plans to open new branches in new areas.
- No immediate mention of other specific capex but emphasis on digital transformation and branch expansion indicate strategic investments to support loan book growth.
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Margin guidance
Category 3- The company aims to grow its loan book from Rs. 322.30 crore (Q1 FY22) towards Rs. 500 crore and beyond, targeting Rs. 700 crore with planned equity infusion and debt leverage.
- Profit before tax grew 13% to Rs. 5.04 crore in Q1 FY22; PAT grew 50% to Rs. 4.08 crore compared to last year.
- Net interest income increased 17% to Rs. 9.35 crore with steady net interest margin around 2.89%.
- EPS improved from Rs. 2.72 to Rs. 3.14 in Q1 FY22.
- Management plans to raise Rs. 50-100 crore equity within the near future, facilitating loan book growth and enhancing capital adequacy.
- Debt-to-equity gearing expected to rise from current ~2.85 to 6-7 times as loan book scales to Rs. 700 crore.
- Business growth focused on expanding geographic presence and leveraging technology for credit appraisal and digital loan processing to maintain asset quality and improve operating efficiency.
- Overall, earnings and EPS are expected to grow in line with expanding loan book and improved operational scale.
Order book
- The transcript does not specifically mention a current or expected order book or pending orders for SRG Housing Finance Limited.
- Disbursements are discussed as a proxy for business activity; Rs. 6.84 crore disbursed in Q1 FY22, with Rs. 16-17 crore sanctions in the current quarter indicating a positive outlook.
- The company expects business to improve if there is no significant impact from a potential third wave of COVID-19.
- New loan applications ("new logins") have increased, with around 250 new logins in the last month mentioned.
- The company is optimistic about growing its loan book with a target of Rs. 500 crore AUM in the near future, though exact timelines are uncertain due to COVID-19.
- Discussions are ongoing around equity raising (Rs. 50-100 crore) to support growth and funding needs.
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What SRG Housing's management said in earlier quarters
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