SRG Housing Finance LtdQ1 FY22
SRG Housing Finance Ltd
Q1 FY22 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 analysisRevenue guidance
Category 2- →SRG Housing Finance aims to grow its loan book to Rs. 500 crore by the end of FY'23, targeting a 50% growth from Rs. 320-325 crore in FY'22.
- →The company plans to expand to 50 branches by March, adding 4-5 new branches mainly in Rajasthan, Madhya Pradesh, and Gujarat.
- →Expected quarterly disbursement run rate is Rs. 50 crore, indicating steady sales momentum.
- →Business environment is improving post-COVID, with increased loan sanction and disbursement activities.
- →Expansion includes a strengthened team with 100 new employees appointed in the last quarter to support growth.
- →Collections are primarily electronic (95% via ECS/Online), ensuring operational efficiency.
- →Management is cautiously optimistic, with growth dependent on market conditions and no major unforeseen hurdles like new COVID variants.
Margin guidance
Category 3- SRG Housing Finance aims to achieve an AUM of Rs. 500 crore by the end of FY'23, indicating around 50% growth from the current Rs. 340 crore book.
- Business expansion is supported by opening new branches (targeting ~50 branches by March) and appointing new employees to drive growth.
- Management expects an improvement in revenue as new branches and employees start generating business, leading to a reduction in the cost-to-income ratio toward ~40%.
- Net Interest Margin (NIM) is targeted to maintain around 10.6% to 12%, despite interest rate fluctuations, given fixed-rate lending.
- Profit before tax grew by 7% in FY22 and 57% in Q4; PAT grew 8% in FY22 and 59% in Q4; expectations suggest these growth trends could continue with market normalization.
- EPS stood at Rs. 16 in FY22 with prospects of sustainable or improved earnings as disbursements and collections stabilize post-COVID.
Overall, management is cautiously optimistic about achieving growth in earnings and profitability aligned with business expansion plans.
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Fundraise plans
Yes- →The company has raised Rs. 167.40 crore during FY22 through debt, with 36% from banks, 43% from financial institutions, and 21% from National Housing Bank.
- →Gearing is currently about 2.5x and is expected to increase to around 3.67x with recent funding of Rs. 115 crore.
- →The management plans to raise equity only after the loan book reaches Rs. 500 crore.
- →No immediate equity fundraising is planned; equity issuance will be considered post achieving the target loan book size.
- →The company aims to achieve a loan book of Rs. 500 crore in FY23 and then look at equity funding to support further growth.
Order book
Yes- →SRG Housing Finance Limited targets an AUM (Asset Under Management) of Rs. 500 crore by the end of FY'23.
- →The company plans a quarterly disbursement run rate of around Rs. 50 crore, supported by branch expansion.
- →They currently have 46 branches and plan to expand to about 50-51 branches by March, focusing on Rajasthan, Madhya Pradesh, and Gujarat.
- →Disbursement in April-May 2022 is positive and comparable or better than the previous year, with sanctioned loans being disbursed.
- →The business momentum is improving post-COVID, with new team appointments and technology enhancements supporting growth.
- →No specific mention of pending orders; the focus is on achieving the Rs. 500 crore book size through ongoing disbursements and branch expansion.
Capex plans
Yes- →SRG Housing Finance is currently in an expansion phase, focusing on branch and team growth.
- →They have opened 9 new branches recently and plan to increase the total branches to around 50-51 by March.
- →New branches planned: 5-6 in Madhya Pradesh, 3 in Rajasthan, and 3-4 in Gujarat.
- →The company is building new teams and investing in technology and software development.
- →Employee hiring is ongoing with approximately 100 new employees added in the last quarter.
- →No explicit mention of large-scale capital expenditure, but investments in branch expansion, human resources, and technology indicate strategic growth capex.
- →They plan to increase leverage (gearing) to about 3.67x (from current 2.5x), having already raised Rs. 115 crore last year for funding growth.
- →Equity raising is planned once the loan book reaches Rs. 500 crore.
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