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

The bank has heavily invested around ₹250 crores in backend technology and middleware, including TIBCO and API-first microservices architecture, primarily during the peak of COVID. For the next 2-3 years, the focus will be on front-end digital-first customer-friendly initiatives and robotic process automation (RPA) to enhance customer experience and process automation. The bank is expanding its branch network, adding around 70 branches annually, particularly in micro-banking, aiming for sustainable growth over the next 3-5 years. Investments are being made in building architecture for governme

Future growth expectations in sales/revenue/volumes?

The Bank targets a loan book growth of 30% to 35% annually over the next 2 years (Page 6, 16). Deposit growth is expected in the range of 40% to 45% to improve the Credit-Deposit (CD) ratio to 100% by end of FY25 (Page 6, 16). Secured loan book is aimed to increase from 41% currently to about 45% by FY25 and potentially above 50% over 2-3 years (Page 10, 11). The retail granular deposit book will continue to be a major focus, including expansion of premium banking and digital banking initiatives for sustainable growth (Page 16). Disbursement growth to continue, supported by inclusive finance,

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

Loan book growth is expected at 30%-35% CAGR over the next 2 years. Deposits are targeted to grow 40%-45%, with a focus on increasing CASA and granular retail deposits. Cost-to-income ratio aimed to improve to around 57% (including CGFMU expenses) next year from 60% currently. Credit cost guidance for FY25 remains stable around 1.5% to 1.8%. Gross NPA has decreased and expected to remain controlled, supported by CGFMU coverage and conservative provisioning. ROA target is 2.3%-2.5% steady state, influenced by a shift towards secured loans. ROE guidance is 14%-16% medium term, inchin

Suryoday Small Finance Bank LtdQ4 FY24Banks

Suryoday Small Finance Bank Ltd Q4 FY24 Earnings Call Analysis

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

Price: ₹144P/E: 8.3Market Cap: ₹1.6K CrSector: Banks

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 2

The Bank targets a loan book growth of 30% to 35% annually over the next 2 years (Page 6, 16).
Deposit growth is expected in the range of 40% to 45% to improve the Credit-Deposit (CD) ratio to 100% by end of FY25 (Page 6, 16).
Secured loan book is aimed to increase from 41% currently to about 45% by FY25 and potentially above 50% over 2-3 years (Page 10, 11).
The retail granular deposit book will continue to be a major focus, including expansion of premium banking and digital banking initiatives for sustainable growth (Page 16).
Disbursement growth to continue, supported by inclusive finance, commercial vehicle, and mortgages segments (Page 3).
Vikas Loans individual loan portfolio expected to contribute increasingly, currently over 53% of inclusive finance portfolio (Page 3).
Overall aim to transition from micro-lending to micro-banking, deepening penetration in existing geographies and customer segments (Page 4, 16).

Margin guidance

Category 3

Loan book growth is expected at 30%-35% CAGR over the next 2 years.
Deposits are targeted to grow 40%-45%, with a focus on increasing CASA and granular retail deposits.
Cost-to-income ratio aimed to improve to around 57% (including CGFMU expenses) next year from 60% currently.
Credit cost guidance for FY25 remains stable around 1.5% to 1.8%.
Gross NPA has decreased and expected to remain controlled, supported by CGFMU coverage and conservative provisioning.
ROA target is 2.3%-2.5% steady state, influenced by a shift towards secured loans.
ROE guidance is 14%-16% medium term, inching potentially up to 16.5%.
Non-interest income is growing with a focus on bancassurance and fee-based businesses.
Operating leverage is expected to improve with scaling digital and micro-banking initiatives, driving better profitability and EPS growth.

See what Suryoday Small Finance Bank Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

Yes

- The Bank plans to raise capital when its capital adequacy ratio approaches around 20%. - Currently, the comfortable capital adequacy ratio is about 25% when the portfolio is 100% unsecured; as the secured book mix increases from 41% to 45%, the comfortable ratio reduces to around 20%. - The capital raise event is expected to be 15 to 18 months away. - There is no mention of immediate plans for equity fundraising; focus is more on managing capital through raising funds when needed. - The Bank is actively managing the cost of funds and refinancing debt instruments like SLTRO (750 crores maturing December 2024) through other sources such as CASA growth and IBPC markets. No explicit announcement of imminent debt or equity fundraising was made, but a capital raise is planned roughly within 1.5 years based on capital ratios.

Order book

The transcript of Suryoday Small Finance Bank Limited's Q4 FY24 Earnings Call dated May 10, 2024 does not provide specific information regarding current or expected order book or pending orders. The discussion primarily focuses on financial performance, loan book growth, asset quality, cost ratios, technology investments, product mix, and strategic initiatives such as retail deposit growth, micro-banking, and digital banking expansion. There is no mention of any order book or pending orders relevant to the bank’s operations.

See what Suryoday Small Finance Bank Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

The bank has heavily invested around ₹250 crores in backend technology and middleware, including TIBCO and API-first microservices architecture, primarily during the peak of COVID.
For the next 2-3 years, the focus will be on front-end digital-first customer-friendly initiatives and robotic process automation (RPA) to enhance customer experience and process automation.
The bank is expanding its branch network, adding around 70 branches annually, particularly in micro-banking, aiming for sustainable growth over the next 3-5 years.
Investments are being made in building architecture for government insurance schemes like PMJJBY and PMSBY, with expected increased expenses considered as strategic investments.
Premium banking and digital banking programs, including video banking and partnerships, are being launched to boost retail business and liability growth.
No immediate plans for inorganic growth or acquisitions; the focus remains on organic expansion and impact creation.

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