SRG Housing Finance Ltd

Q1 FY24 Earnings Call Analysis

Management growth scorecard

Fundraise

Yes

Capex

Yes

Revenue

Category 2

Margin

Category 3

Order

Yes

3 of 5 growth signals are positive.

Full analysis

Fundraise plans

Yes

→In FY24, SRG Housing Finance Ltd raised ₹227.80 crores, with 40% from public sector banks and the rest from financial institutions. Total borrowings stood at ₹491 crores.
→The company plans to raise additional equity of ₹50-100 crores in FY25, with board approval already in place and expects to close this within one to two months.
→The current debt-to-equity ratio is 3x; the company aims to maintain leverage up to 10x with SBI approval, while RBI allows up to 12x for housing finance companies.
→Up to ₹1000-1500 crores of equity funding is considered sufficient for current growth plans, reducing the need for additional equity raising until AUM reaches ₹1500-2000 crores.
→Borrowing mix as of now: 49% banks, 39% financial institutions, and 12% National Housing Bank.
→No immediate plans for further equity raises until current targets are met.

Capex plans

Yes

→SRG Housing Finance Ltd is in full expansion mode with plans to open 25 new branches.
→New branches are being established primarily in Maharashtra, Karnataka, Tamil Nadu, Telangana, and Andhra Pradesh.
→The company has finalized locations and recruited expert teams, including branch managers, for these expansions.
→The Mumbai corporate office has been set up as a Pan-India business expert hub to monitor these expansions.
→Branch expansion timeline: 15 new branches planned for Q2 FY25 and 10-15 branches in Q3 FY25.
→Each new branch typically takes 4-6 months to break even; some existing branches reach breakeven within 6 months.
→There is a plan to raise ₹50-100 crore in equity during FY25 to support business growth and expansion.
→The company is investing in scaling up its teams and infrastructure but expects operational cost efficiencies as AUM grows.

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Revenue guidance

Category 2

→FY25 target disbursement: ₹400 crores (average monthly ₹30-35 crores)
→FY25 target AUM: ₹700-780 crores (growth of about ₹200 crores from FY24)
→FY26 target AUM: Expected to cross ₹1,000 crores
→Expansion plan: Opening 25-30 new branches in FY25, including Maharashtra, Karnataka, Tamil Nadu, Telangana, Andhra Pradesh
→Branch network target: 90 branches in FY25; over 100 branches by FY26
→Equity raise planned in FY25: ₹50-100 crores to support growth and new branches
→Borrowing mix stable with a debt-to-equity ratio currently 3x, with potential leverage up to 10x as per approvals
→Efficient scaling expected to reduce operating expenses growth relative to top-line growth as fixed overheads are absorbed
→Monthly disbursement volumes currently equivalent to past annual disbursements, indicating strong ramp-up potential

Margin guidance

Category 3

→FY24 Profit Before Tax: ₹26 crores, up from ₹21 crores last year (23.8% growth).
→Net Interest Income increased from ₹44 crores to ₹59 crores (34% growth).
→EPS rose from ₹13.12 to ₹15.87 in FY24 (21% growth).
→Target AUM for FY25 is ₹780 crores, up from ₹601 crores in FY24, indicating continued portfolio growth.
→Disbursement target for FY25 is ₹400 crores, up from ₹283 crores in FY24, implying top-line growth.
→Expect operating cost growth moderated with scaling: doubling AUM needs only 10%-20% team size increase, leading to better expense ratios.
→Plans to raise ₹50-100 crores equity in FY25 to support growth up to ₹1,000-1,500 crores AUM without immediate additional equity.
→Loan book mix stable with 70% housing loans; LTV conservatively maintained to manage credit risk.
→Overall, management expects steady profit and earnings growth supported by branch expansion, portfolio growth, and operational scaling.

Order book

Yes

The document does not explicitly mention a current or expected order book or pending orders for SRG Housing Finance Ltd. However, relevant points about their business pipeline and targets include: - FY25 disbursement target: ₹400 crores. - Expected increase in Assets Under Management (AUM) by around ₹200 crores, targeting ₹700 to ₹780 crores. - Plans to open 15 new branches in Q2 and another 10-15 in Q3 across Maharashtra, South India, and other states. - New branches to start operations in Q2 and Q3, with break-even expected within 4-6 months. - Target AUM for FY26 is expected to cross ₹1,000 crores. - Equity raise planned between ₹50-100 crores in FY25 to support growth. - Current branches contributing actively to the order pipeline, with rapid ramp-up in disbursements. No direct mention of order book or pending orders beyond these business expansion and disbursement targets.

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