Arman Financial Q4FY18 Concall Summary

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Financial highlights

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  • AUM grew from 190 crores to 450 crores over last year which is 120% growth y-o-y
  • The growth is attributed to competition vacuum post demonetization and expanded branch network
  • Income from operations increased to 110% previous year Q-o-Q, with two third being from microfinance side, 20% from two-wheeler side and remaining from MSME side
  • Profit this quarter was Rs. 2.43 crores are compared to loss of 74 lakhs for fourth quarter last year
  • Last year was extraordinary due to demonetization effect, but the company has continued to grow at 40% to 50% for last 8 years
  • The NIM have come down from 17.3% in 1QFY2018 to 13.2% in 4QFY2018, the reason being that the companyhas now become almost completely leveraged for its Tier 1 and Tier 2 requirements


  • SAP has invested 50 crores in the form of CCD
  • It will be converted into ordinary equity after 18 months
  • The purpose of this funding is to decrease over all interest cost, better rating from credit rating agency and manage risk

MFI business 

  • Disbursements was 400 crores this category for completeyear
  • Company plans to foray into Rajasthan for MFI operation
  • Company is using aggressive write-off policy to take tax benefits
  • Average loan size in UP is Rs 18000 and 100% of the disbursements are cashless
  • Company is unique in having dedicated recovery staff in those branches where there are recovery problems
  • Next year target will be about 400 crores to 450 crores AUM in this category
  • Collection efficiency post-demonetisation is about 99.42%
  • Operating expense is 8.5%
  • Currently, there is not a lot of pricing pressure in this business, but it is more about timely delivery of funds that is important to customers of this segment
  • Company sees lots of opportunities in UP and hence it is going to open around 20 branches there in next year

Two-Wheeler segment 

  • Disbursements was 484 crores this category for the year
  • Next year’s target would be around Rs 90 crores to Rs 100 crores AUM in this category
  • Operating expense in close to 6% to 6.5%

MSME Segment 

  • Disbursements was 46 crores this category for the year
  • Company plans to start Loan against property product
  • Next year target would be around Rs 100 crores plus another Rs 25 crores to Rs crores from LAP
  • Operating expense is about 10% to 11%
  • The product is priced such as to achieve margin of 3%
  • The target group for this product is people with well-established businesses who are unbanked at the moment


  • Increase in provision was Rs 87 lakhs for standard assets because of increased asset size for this quarter
  • Write-off was Rs 87 lakhs for this quarter


Other Concall Summaries of Arman Financial Services