Any current/future new fundraising through debt or equity?

The company plans to raise additional capital and has already issued warrants for subscription. Interest from High Net Worth Individuals (HNIs) and family offices is being received for participation in long-term growth. Any capital raise beyond warrants will be presented to the Board for approval. Debt-wise, the company intends to diversify liabilities through term loans, refinancing from former regulators, Non-Convertible Debentures (NCDs), and partnerships with financial institutions. Current borrowing stands at Rs. 335.35 crores from six banks and 11 financial institutions with a debt-to-eq

Any current/future capex/capital investment/strategic investment?

The company has issued warrants and is exploring raising additional capital, with interest from HNIs and family offices for long-term growth participation. Any capital raise will be presented to the Board for approval. Plans to expand branch network from 34 to 50+ branches in the current financial year and to 100+ branches over the next few years to support growth. Investment in capacity creation through recruitment of quality manpower and digitization of processes. Exploration of presence in new geographies, including select southern states and adjoining states like Chhattisgarh. Potential st

Future growth expectations in earnings/operating earnings/profits/EPS?

Star Housing Finance aims to achieve Rs. 500 crore AUM shortly and targets Rs. 1,000 crore AUM by December 2025. Over the next 48 months, the goal is to reach Rs. 2,000 crore AUM through branch network expansion (+100 branches). The company expects to sustain a credit and collection-focused strategy ensuring consistent asset quality. Projected spread between yield and borrowing cost is 500 to 550 basis points, supporting sustainable ROE and ROA. Management targets a +18% ROE in the steady state over the next 4 years. Borrowing cost rise from approx. 9.75% to around 11.25%-11.5% has reduced bot

Future growth expectations in sales/revenue/volumes?

Star Housing Finance is targeting to cross Rs. 500 crores AUM by mid-2024, already close at Rs. 471 crores as of June 2024. Next milestone is Rs. 1000 crores AUM, targeted within 4 to 6 operational quarters (by December 2025). Further scaling to Rs. 2000 crores AUM over the next 16 quarters (~4 years) following the Rs. 1000 crore mark. Branch expansion planned: from 34 branches currently to +50 by end of current financial year, and +100 branches over a few years for scaling. Monthly disbursement steady state expected to rise from Rs. 20-22 crores to Rs. 35-40 crores with 50 branches, a

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Star Housing Finance LtdQ2 FY24Finance

Star Housing Finance Ltd Q2 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹6.6P/E: 8.8Market Cap: ₹59 CrSector: Finance

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

→Star Housing Finance is targeting to cross Rs. 500 crores AUM by mid-2024, already close at Rs. 471 crores as of June 2024.
→Next milestone is Rs. 1000 crores AUM, targeted within 4 to 6 operational quarters (by December 2025).
→Further scaling to Rs. 2000 crores AUM over the next 16 quarters (~4 years) following the Rs. 1000 crore mark.
→Branch expansion planned: from 34 branches currently to +50 by end of current financial year, and +100 branches over a few years for scaling.
→Monthly disbursement steady state expected to rise from Rs. 20-22 crores to Rs. 35-40 crores with 50 branches, and to Rs. 75-80 crores with 100+ branches.
→Growth focus emphasizes quality loan book and sustainable scale-up, avoiding rapid expansion that compromises asset quality.
→Growth plan supported by strong liability pipeline and capital infusion including warrant subscriptions and potential additional capital raises.

Margin guidance

Category 3

→Star Housing Finance aims to achieve Rs. 500 crore AUM shortly and targets Rs. 1,000 crore AUM by December 2025.
→Over the next 48 months, the goal is to reach Rs. 2,000 crore AUM through branch network expansion (+100 branches).
→The company expects to sustain a credit and collection-focused strategy ensuring consistent asset quality.
→Projected spread between yield and borrowing cost is 500 to 550 basis points, supporting sustainable ROE and ROA.
→Management targets a +18% ROE in the steady state over the next 4 years.
→Borrowing cost rise from approx. 9.75% to around 11.25%-11.5% has reduced bottom line by 18%-20%, with expectations of proportional bottom line improvement on cost reductions.
→Profit after tax grew by 94.83% YoY in Q1 FY25, indicating strong current momentum.
→Dividend payout raised by 50%, reflecting confidence in future earnings growth.

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Fundraise plans

Yes

→The company plans to raise additional capital and has already issued warrants for subscription.
→Interest from High Net Worth Individuals (HNIs) and family offices is being received for participation in long-term growth.
→Any capital raise beyond warrants will be presented to the Board for approval.
→Debt-wise, the company intends to diversify liabilities through term loans, refinancing from former regulators, Non-Convertible Debentures (NCDs), and partnerships with financial institutions.
→Current borrowing stands at Rs. 335.35 crores from six banks and 11 financial institutions with a debt-to-equity ratio of 2.43x.
→Liability pipeline is strong, planned as per the business plan to fund growth initiatives.
→Fundraising activities align with expansion and scaling plans but no specific forward-looking commitments were declared.

Order book

Yes

- Current Asset Under Management (AUM) stands at Rs. 471.41 crores as of June 30, 2024. - Disbursements for Q1 FY25 totaled Rs. 61.23 crores, a 76.61% year-on-year growth. - The company is close to crossing the Rs. 500 crore AUM milestone. - Target to achieve Rs. 1000 crore AUM within the next 4 to 6 operational quarters (by December 31, 2025). - Plan to further scale to Rs. 2000 crore AUM over the subsequent 8 to 10 quarters after reaching Rs. 1000 crore. - Liability pipeline is robust with borrowings standing at Rs. 335.35 crores across six banks and 11 financial institutions. - Warrants issued in December 2023 have seen 25-26% subscription; remaining expected within 12 months, enhancing net worth and funding growth. This reflects a strong pending orderbook in the form of loan disbursement pipeline aligned with planned growth targets.

Capex plans

Yes

→The company has issued warrants and is exploring raising additional capital, with interest from HNIs and family offices for long-term growth participation. Any capital raise will be presented to the Board for approval.
→Plans to expand branch network from 34 to 50+ branches in the current financial year and to 100+ branches over the next few years to support growth.
→Investment in capacity creation through recruitment of quality manpower and digitization of processes.
→Exploration of presence in new geographies, including select southern states and adjoining states like Chhattisgarh.
→Potential strategic presence testing in a couple of new geographies is planned, including a small presence in a couple of US geographies.
→No specific mention of large-scale capex, but emphasis on operational expansion and supporting infrastructure through branch and team growth.

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