SRG Housing Finance LtdQ3 FY24Finance

SRG Housing Finance Ltd

Q3 FY24 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 2

→The company aims to expand to 100 branches by March FY25 and maintain them for 2-3 years to build a strong loan book.
→Disbursement targets are INR 350 crore for FY25 and around INR 400-450 crore for FY26.
→AUM is expected to grow to around INR 750 crore in FY25 and cross INR 1,000 crore in FY26.
→The company envisions growing its business up to 5 times in the next 5 years through strong rural housing finance focus.
→Expansion will prioritize profit with lower expenses and efficient operations rather than merely increasing AUM.
→Pan-India team establishment and strategic hiring of experienced personnel support this growth.
→With government rural development schemes and improved rural incomes, the demand in target markets is expected to grow significantly.

Margin guidance

Category 3

→SRG Housing Finance aims for significant business growth, potentially scaling 5 times over the next 5 years.
→Expansion is focused on rural housing finance, with improved rural incomes and infrastructure driving demand.
→The company plans to raise INR 50 crores by March FY25 to support branch expansion, targeting 100 branches.
→Operating expenses will be higher during this expansion phase but are expected to normalize to 60-65% cost-to-income ratio after new branches stabilize.
→Profit before tax increased to INR 8.33 crores in Q2 FY25 from INR 6.58 crores in Q2 FY24, signaling profitability growth.
→Net interest margin stands at 2.77%, with a healthy spread of 10.83%.
→EPS rose to INR 4.87 in Q2 FY25 from INR 4.05 in Q2 FY24, reflecting earnings growth.
→The management emphasizes realistic, achievable targets and anticipates visible results of growth within the next year.

Get access to all 5 sections — revenue, margin, fundraise, orderbook, and capex — for SRG Housing Finance Ltd and 1,400+ other companies.

Fundraise plans

Yes

→SRG Housing Finance plans to raise an additional INR 50 crores in equity by March to support opening new branches and business expansion.
→The INR 50 crore equity raise is primarily for funding branch operations and to create equity for leveraging and growing the loan book.
→There are no immediate plans mentioned for further debt fundraising.
→The fundraising aligns with the goal to reach 100 branches by March and then consolidate the loan book from these branches before further expansion.
→The company already completed a fundraise of INR 50 crores in Q2 FY25, with 40% from banks and the rest from financial institutions.
→No recent credit rating updates after December 2023; the company has an annual review process with CARE credit rating agency.

Order book

Yes

The provided transcript does not mention any details about the current or expected order book or pending orders for SRG Housing Finance Ltd. The discussion primarily focuses on loan book size, disbursement, branches, credit processes, customer profiles, and company strategy. There is no information related to order book or pending orders in the excerpts from the call on page 19 or the surrounding pages.

Capex plans

Yes

→SRG Housing Finance plans to raise an additional INR 50 crore by March to fund expansion.
→This capital raise will support opening new branches, aiming to reach 100 branches by March FY25.
→The raised equity is primarily for leveraging and growing the loan book, not just for branch setup.
→Branch setup cost is estimated at INR 3-4 lakhs per branch.
→Post reaching 100 branches, the company intends to pause branch expansion for 2-3 years to focus on building a strong loan book.
→Strategic emphasis is on expansion with a strong team and infrastructure.
→The company is forming a pan-India team with experienced hires to support growth and scalability.

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