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

Shriram Transport Finance Q1FY19 Concall Summary

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Information about company

  • No of branches = 1,230 (with 854 rural centres)
  • No of employee = 24,533
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India’s economic scenario:

  • 7.7% EBITDA growth rate, making India as world’s fastest growing and major economy
  • Increase in GST collections to INR 97,000 crore per month in April-June 2018
  • Increase in MSP and goof rainfall in the past 2 years to boost consumption in rural areas

Industry overview:

  • 51.55% growth in committed vehicle segment for Q1FY19

Company’s Q1 financial information

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  • 21.975 growth in AUM to INR 1,00,000 crore in Q1FY19 against INR 82,597 crore in Q1FY18
  • Net interest income (NII) increased by 19.58% to INR 1,840.3 crore compared to INR 1,538.95 crore in Q1FY18
  • Profit increased by 24.37% yoy to INR 571.72 crore against INR 459.69 crore in Q1FY18, higher than AUM growth
  • Changes linked with adoption of Ind AS from IGAAP
  • Consideration of securitized portfolio as well for gross NPA calculations in Ind AS compared to considerations of only on books portfolio in IGAAP
  • Gross NPA is INR 9,127 crore as per Ind AS
  • Profitability increased from INR 540 crore (as per IGAAP) to INR 572 crore (as per Ind AS)
  • Increase in the book value by INR 40 crore due to adoption of Ind AS
  • Overall capital liquidity has gone up
  • ECL provisions to come down gradually from 2.5% over the period of time depending upon the operating environment
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Other financial information

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  • Revenue and interest cost are separately mentioned in the P&L statement in Ind AS compared to only net revenue in IGAAP
  • Operating expenses growth is 30.47% in this quarter is primarily due to increase in branch network and employee strength
  • Earnings per share (EPS) increased to INT 25.20 from INR 20.26 in this quarter
  • Net worth of company increased by INR 900 crore
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Coverage ratio

  • Coverage ratio has come down to 57% from 71% and is expected to stay within 55-60% in the future
  • Decrease in the coverage ratio has been one of the reasons for increase in the net worth of company
  • Cost guidance is 2% for FY19

Government decisions

  • Axle load capacity of vehicle was increased by 40%. This will reduce the demand of new vehicle in coming 2-3 months but won’t affect in long run due to strong economic activities
  • Increase in the life of vehicle from 15 years to 20 years by government of India. This should increase the demand of used vehicle
  • Reduction in the barriers due to GST has increased the coverage km per day by 20-25% thereby increasing their earnings, but increase in fuel prices reduced their margins. Thus, overall there is little advantage due to net effect

Disbursements of loans

  • Total disbursement is INR 13,425 crore = INR 1,936 crore from new vehicle + INR 10,955 crore from used vehicles + INR 534 crore from business loan
  • Duration of the loans are 6-9 months for working capital and 3-5 years for business loans
  • Interest rates are 20% for working capital and 15-18% for business loans
  • Provisions of loans are 78% in stage I, 13% in stage II and remaining 9% in stage 3
  • LGT is about 34%
  • Number of PV is 5.82 for stage I, 13.39 for stage II and 100% for stage III with LTV of 33.8

Inorganic growth strategy

  • Focus is more on the used vehicle loans in the rural areas
  • Fulfilling strong demand in the North and East region of country

Recent tie ups

  • Tie up with HPCL to provide fuel for 15 to 30 days credit with daily interest charged
  • Intended to enroll 1 lakh customers by June-19

Future projections

  • ROI of the company is expected to be around 2.2% at bottom cycle to 2.8% at top of the cycle
  • Expected assets growth rate to be 10% minimum incase economy is not going well
  • The credit cost as per Ind AS is expected to come down to about 2% by year-end
  • AUM target for this year is 18-20%
  • Cost to income ratio is about 22% and expected to maintain it around 20-24% in future


Other Concall Summaries of Shriram Transport Finance



IIFL Holdings Q2FY18 Concall Summary


Macro Environment

  • Management believes the macro environment is looking good and positive
  • India’s rank in ease of doing business improved by 30 notches.
  • Management believes that the global investors are bullish on India’s growth given the government’s policies and initiatives
  • Bank Recapitalisation which was the only big bang reform left unfinished is now completed
  • Impacts of Bank Recapitalisation would be:
    • Monetary transmission of lower interest rates
    • Trigger the credit off-take, which has been slow and sluggish, to pick up
    • With demands revival it is also expected to  see the private sector investment cycle coming back
  • On the negative side, the Brent oil has crossed $60 mark and that’s not good for India’s fiscal
  • SBI has reduced the MCLR rate by 5 basis points
  • In long term i.e. in  three years, five years or ten years inflation has to be headed downwards.
  • India is a globally integrated and linked economy and nobody is expecting global inflation to be high in the foreseeable future.
  • For financial services industry the firm believes it has a very positive outlook and is seeing tailwinds at this point in time, and as the economy grows faster will see a leverage impact on the financial services industry.
  • PSU recapitalisation would not have an adverse Impact on NBFC’s as NBFC like IIFL operate in very niche verticals where banks don’t have specialised skills.

 Financials Highlights

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  • 40% YoY growth in the group’s net profits to Rs. 291 Crores.
  • Net profits after minority interest have grown by 25% YoY to Rs. 229 Crores.
  • Net worth: Rs. 4,740 Crores.
  • ROE : 19.7 % and ROA : 2.5 %
  • The average cost of borrowing declined by 12 basis points QoQ and 110 basis points YoY to 8.5%, with the borrowing rate being at an average cost of 7.9%.
  • NPA ratios in all segments were flat or declined QoQ except for NBFC segment wherein it grew from .94% to 1.09%.
  • The firm won’t raise capital before September, 2019.
  • Borrowing is Rs 29,000 Crores.
  • Liquid Asset and Investments is around Rs 4000 Crores.
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 Financial Service Industry

  • For Medium to Long term, the firm sees three mega trends and those three mega factors are the foundation for the growth strategy for the firm too.
  • The first trend is financialization of savings: Started with demonetisation but there are much stronger underlying factors driving that. The other main reason for this is the lower interest rates on bank deposits , which , if adjusted for tax gives the investor less than 5% of returns.
  • Real estate and Gold has become unattractive investments with demonetisation being one of the reasons and the abysmal returns from these asset classes. Real Estate as an investment has become even more unattractive with RERA.
  • The next mega trend is Housing, as trillions of dollars would be required for Government’s plan of housing for all by 2022.
  • The company plans to launch an AMC platform, a Real Estate fund which is targeted at investing in the affordable housing projects.
  • The third  mega trend in terms of growth would be SME; they will drive growth in next 10 -20 years.

NBFC Segment

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  • NBFC segments’ Net worth is Rs 3712 Crores.
  • Loan AUM grew 27% YoY and 12% QoQ to Rs. 26,033 Crores.
  • Profit after Tax grew by 30% YoY to Rs. 132 Crores.
  • The firm’s Tier-1 CAR stands at 17.0% and total CAR at 18.4%.
  • Due to a favourable CAR the firm can remain well-capitalized to the growth requirements.
  • AUM growth is driven primarily by small ticket home loans which grew by 64% YoY.
  • Small ticket SME loans grew by 65% YoY.
  • Small ticket housing and SME loans are the firm’s focus segments and will remain its primary growth drivers.
  • Capital market loans have grown largely due to short tenure IPO funding
  • AUM growth was moderate or negative for LAP and Gold segments
  • In home loans, the focus remains primarily on the self-employed section which constitutes 60% of the loan portfolio.
  • The fastest growing segment in home loans is the affordable home segment i.e. Swaraj loans with average ticket size of 10 lakhs to 12 lakhs.
  • More than 15% of the incremental quarterly home loan disbursements are as Swaraj loans.
  • The firm has recently been sanctioned an additional refinance of Rs. 500 Crores by NHB taking the cumulative amount to Rs. 825 Crores.
  • As on 30th September 2017 the firm had nearly 5,000 approved housing projects up nearly two fold from 2,700 approved projects a year back.
  • LAP has been impacted by GST in some of the SMEs and in Real Estate sector.
  • Overall portfolio risk is on the decline as our portfolio mix continues to become more granular, with greater share of small-ticket home loans and SME loans
  • Retail loans including consumer loans and small business finance below Rs. 1 Crores constitute nearly 85% of the firm’s loan book.
  • Average ticket size is Rs 22 Lakhs for Home loans.
  • About 40% of the firm’s home loan 60% of LAP, 90% of CV, 20% of SME and nearly all of the MFI loans are PSL compliant.
  • In aggregate nearly 35% of loans are PSL compliant which the firm can sell down to banks at attractive rates.
  • Share of securitized books stand at 12 % of AUM, the aim for the aim for the next 12 months is to bring the share of securitized books to 15-20%
  • NIM (Net Interest Margin) for the firm is 7.2% up 56 basis points QoQ.
  • Cost to income ratio was at 35.8%
  • OPEX to average loan book ratio was at 3.05%
  • The firm believes Cost to Income and OPEX to loan would fall due to better economies of scale and digitization.
  • Gross NPAs a1.95% of against 2.04%  previous quarter
  • Net NPA 1.09% of loans up from 0.94% in the previous quarter
  • The NIM was around 6.6% in last quarter.
  • The total borrowings were about Rs. 21,000 Crores in the NBFC consolidated books.
  • Rs. 6700 Crores is in the form of borrowings.

Digitisation of NBFC

  • Out of 4.25 lakh loans on boarded in the last quarter
  1. 95% digitally boarded
  2. 92% acquired through Aadhar based e-KYC authentication.
  • Over 37% loans being digitally signed thereby reducing turnaround time and on-boarding the customers seamlessly in paperless mode
  • IIFL mobile app had 1.65 lakh downloads
  • The latest business vertical ‘Digital Finance’ on boarded 16,500 customers last quarter all acquired digitally.

Analytics used in the firm

  • The company generated 2 lakh plus leads from internal customer base in Q1FY18
  • Analytics have also been used for early detection and deterrence of frauds.

Wealth Management Segment

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  • PAT grew by 67% YoY to Rs. 95 Crores.
  • Assets under advice, management and distribution have grown 47% YoY and 5% QoQ to reach Rs. 1.33 trillion.
  • Hired thirty RMs during the last quarter taking the total number of RMs to 283.
  • In second quarter raised around Rs. 4,000 Crores in net new money compared to Rs.11000Crores in last quarter.
  • Garnered 1600 Crores in focused equity AUM’s and 700 Crores in focused debt and equity mutual fund products.
  • Raised 2400 Crores in the Special Opportunity Funds which invests in pre-IPO and IPO.
  • The total commitments in these funds are now over Rs. 6,500 Crores.
  •  AIF assets grew 53% YoY to almost Rs. 9,000 Crores.
  • Total assets under management  Rs. 22,848 Crores comprising
    • Rs. 11,484 Crores  in  domestic AMC
    • Rs. 11,364 Crores in offshore AMC.
  • The loans given to HNI clientele against margins grew 13% QoQ and 2.1 fold YoY to Rs. 4,852 Crores and lending rate for them is 10.5 %.
  • IIFL had a onetime mark-to-market loss of about Rs. 15 Crores on investments which resulted in lower fund based income in this quarter.
  • The effective tax rate for first half FY18 was about 25% and for the whole of FY18 the firm expects the effective tax rate to remain at this level.
  • Significant cost increase in last quarter as employee cost has gone up by 20% QoQ and 50% YoY and other operating expenses have gone up by almost 55% on a YoY basis.
  • Average ticket has fallen to about less than Rs. 8 million vs. the earlier Rs. 9 million.

Capital Markets segment

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  • During the quarter average daily cash turnover was up 14% YoY to Rs. 1,220 Crores.
  • Daily cash turnover is Rs 1220 Crores up by 14% YoY.
  • Average daily total turnover including F&O was up 47% YoY to Rs. 13, 269 Crores.
  • NSE market share in the cash segment remains around 4% and in total around 2%.
  • Mobile trading app IIFL Markets had over 1.1 million downloads.
  • 37% of retail broking clients trade through the mobile app.
  • Investment banking tail completed six transactions during the quarter including four IPOs
    • ICICI Lombard
    • Dixon Technologies
    • Capacite Infraprojects
    • SIS India
    • Completed IPP of Questcon


IIFL holdings Q1FY18 Concall Summary


 Financial Highlights

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  •  59% YOY growth in the group’s net profits
  • Current Net profit is INR 252 crore for the first quarter FY18
  • Net profits after minority interests have grown by 44% YOY to Rs. 198crores.
  • Net worth = 4581 crores
  • ROE = 17.7 %
  • ROA = 2.3 %

Business updates

  • The business of IIFL is divided into 3 parts
    • Loans and Mortgages( includes NBFC and House Financing subsidiary and micro finance subsidiary)
    • Wealth and Asset Manage
    • Capital Markets
  • Strategy for the firm is doubling, durability and de-risking.
  • Doubling strategy’s target is to double their income and multiply our profits by 2.5 times.
  • In incremental loans, significant contribution is coming fromsmall ticket home and SME loans

Macro- Environment

  • GST and RERA have been passed recently .
  • GST more smoothly passed then demonetization .

Loans and Mortgages

  • In NBFC strategy is retail lending and digital delivery
  • Reduced exposure to large ticket loans.
  • The firm’s Balance Sheet is becomingmore granular, lot more retail oriented,and lot more geographically diversified as well.
  • Demonetisation hit commercial vehicle finance also starting to look up


  • Loan AUM grew 26% YOY and 5% QOQ to INR 23,3000 Crores.
  • Profit after tax grew by 31% YOY to INR 116 Crores.
  • Net Worth – Rs 3580 Crores.
  • Tier 1 CAR is 18.1 % and total CAR is 20.6 %
  • Well capitalized to meet growth requirement for next 2-3 years
  • AUM growth primarily driven by 52% YOY growth in small ticket home loan
  • Headcount grew by 5% YOY to 7800 members.
  • NBFC branches still same at 1114 .

Home loans

  • Focus primarily on self employedsection , contributing 60% of Home loan portfolio
  • The fastest growing segment in is the affordable home segment with average ticket size of Rs. 10 to 12 lakhs. Called Swaraj Loans
  • More than 10% of home loan business are Swaraj loans.
  • Among the top six HFCs ingovernment’s Credit Linked Subsidy Scheme or CLSS , customers received Rs 90 Crore subsidy so far
  • Availed NHB refinance of Rs. 150 crores in this quarter taking the total to Rs. 325 crores
  • Regulators have confidence in the firm’s portfolio and mix
  • Crossed 31,000 customers in HFC  and the target of  50,000 by financial year end
  • Average ticket size for loan is 22 Lakhs
  • LAP book has seen a slight QOQ decline as the focus is to grow retail home loans
  • LAP products’ yield, andprofitability remainunder pressure due to competitive reasons
  • To focus on small ticket LAP ofbelow Rs. 50 lakhs and micro-LAP of up to Rs. 10 lakhs
  • The firm is doing larger number of home loans with ticket size of Rs. 10 to 12 lakhs and SME loans with ticket size of about 20 lakhs
  • 4500 approved housing projects up from 2000 in 2016 .
  • Cost of borrowing declined by 20 basis points QOQ and 140 basis points YOY to 8.6 %.
  • Borrowing from banks at their MCLR .
  • NIM at 6.6 % up 50 basis points YOY and down by 21 basis points QOQ .
  • Cost to income ratio at 39%  down 370 basis points YOY and flat QOQ .

 Wealth Management

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  • Record quarter in terms of new money
  • Highest collection of new money
  • With new money and other organic growth , the wealth business has done very well
  • Wealth PAT grew by 64% YOY to RS 86 Crores .
  • Assets under advice, management anddistribution have grown 60% YOY and 17% QOQ to reach Rs. 1.26 trillion.

Additional Disclosures this year

  • Reclassified the assets into five categories and removed few assets which were being doubled
  • Provided breakup of the retention yield into fee-based and fund-based yield.
  • Provided breakup of our retention yield into fee-based and fund-based yield.
  • The firm raised Rs.11,250 crores in net new money which is 50% of the net new money garnered in the whole of FY17.
  • In AMC, the firm raised Rs. 4000 crores in special opportunity fund to invest in pre-IPO and IPO situations.
  • AIF assets have grown 67% YOY to more than Rs. 8300 crores.

Capital Market Business

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  • IIFL is a leading player in the Industry
  • In last 2 decades , the firm has made strong franchisee in capital markets
  • The capital market sector is quite volatile as per the insights based on 10-15 years business
  • Emerged number 1 in Primary equity issuance
  • Average daily cash turnover was up 34% YOY to Rs. 1112 crores.
  • Average daily total turnover was up 53% YOY toRs. 11,063 crore.
  • The mobile trading app IIFL Markets, has had over 1 million downloads, and presently about 36% of retail broking clients trade through the mobile app
  •  IIFL is ranked number one investment banker in equity issuances from January 1, 2016, to June 30, 2017.
  • IIFL is ranked number one investment banker in equity issuances from January 1, 2016, to June 30, 2017.

Effect of Demonetisation

  • Commercial Vehicles finance which was hit by the demonetization is starting to look up.
  • The payment cycle from bank operator has gotten longer post demonetisation.
  • Karnataka and UP Portfolio affected by the policy and was compounded by the political


  •  Moved to 90 day NPA norm
  • GNPA were at 2.04% up from 1.82% .
  • NNPAS were at 0.94% up from 0.58% last year
  • NPA’s largely in the CV segment , as industry is still going through a slowdown in volume growth and collections .


  • 100% gold loans , 77% of CV loans , 26% of HFC Loans and 71% of SME loans were booked in digital mode in June 2017 .
  • 14% of Gold loans were sold through E-Sign.
  • Launched UPI-based collection on the mobile app to allow seamless and real-time payments into the loan account.


  • 99% of gold loans, 30% of CV and SME customers now getting booked on E-KYC platform


  • Strong focus on maximizing the use of data and analytics to drive business decisions
  • strengthen the risk analytics capabilities and incorporate scorecards into the digital on-boarding mechanism for core retail product

Acquistion of Majority Stake in Samasta microfinance

  • The firm acquired a majority stake in Samasta Microfinance
  • Samasta Microfinance is headquartered in Bangalore
  • Promoted by Venkatesh
  • Assets under advice for the firm was Rs. 284 crore .

Geographic Split and Reach

  •  35% South , 35% West , 12% East and 18% north
  • North business potential not fully utilised .
  • 1100 Branches in the country.


  • For Small Ticket loans , the firm has digitized the process for loans .
  • They plan to create insta loan for loans less than 10 lakhs .
  • Rs 10 – Rs 50 lakh loans is main focus for the firm.


Canfin Homes Q1FY18 Concall Summary


Financial highlights

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  • This quarter was one of the best quarters in terms of numbers i.e., the NIIs, the PBT, the PAT, the NIM, the ROA, the ROE all the numbers are best ever posted by CanFin.
  • In Q1 the loan book growth has been 23.5%, surpassing the 13,800 Crore loan book that was planned for Q1.
  • Earnings have increased by 29%, expenses have increased by 12% resulting in NII improvement by 34% to 123 Crores, which is a resultant of the loan book growth of 23.5% coupled with the cost of funds.
  • Cost of funds were down by 82 basis points yoy.
  • Yield on advances has dropped 32 basis points.
  • Margins have improved to 3.65% compared to 3.39% a year ago.
  • Margins have dropped 26 basis points sequentially compared to March 3.54% where it was 11 basis points, the margins have gone up.
  • Total income has gone up by 19% and expenses by 13%
  • Cost income ratio has added 34% to the NII growth.
  • Cost income ratio is registered to be best ever of 14.90 compared to 17.02 of Q4 and 17.8 for the previous Q1.
  • Operating profit are up by 37%, clocking 116.34 Cr
  • PBT has gone up by 42% at 111 Cr and the PAT is 71.22 Cr.
  • Sequentially, it is almost a bit above the Q4 of last financial year, considering yoy there is a 43% increase in PAT.
  • The ROA has gone up to 2.11%, crossing 2% mark for the first time, it was 1.84% in the corresponding quarter of previous year and it was 1.97% in March just below the 2% mark.
  • ROE has gone up at 25.54, with an increase of 3.88% compared to 21.66% to the previous year.
  • Capital adequacy is 19.17%, improved due to higher earnings being ploughed back and Tier I it is 16.7%.
  • Average business per branch and per employee has improved with per branch business going up to 102 Cr.
  • Currently business going up to 23.5% Cr, which was around 18.5 during the previous year at this time.
  • 100% of the book is backed by mortgage, so the decision to invoke the SARFAESI has been made.
  • Canfin primarily is into individual housing that is 88.5% is housing and around 11.5% is non-housing with the average ticket size continuing to be around 18 lakhs and 9 lakhs.
  • 95% of the loan approvals are in the income range of redefined affordable housing i.e. up to 18 lakhs annual income, in that up to 6 lakhs, the LIG segment constitutes around 53% and around 42% in MIG segment.
  • Disbursements compared to last year sequentially if you see Q4 and Q1 of current year, Q4 of last year the disbursements had slumped, for the quarter it had slumped to 3% yoy increase, Q4 of FY 2016 and Q4 of FY 2017 the growth was 3%, current year it is 10%, Q1 of FY2018 is up by 10% compared to Q1 of FY2017.
  • Loan book growth in Q4 FY2017 was negative 16% compared to Q4 FY2016, now the gap has been breached and there is a positive.
  • Sanctions and disbursements are both slow compared YoY is due to enactment of the RERA.
  • Q4 had partially faced impact of demonetization as there was two months moratorium given to the HFCs for the months of November and December.
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Asset Quality

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  • Asset quality continues to be top priority.
  • Q1 has witnessed some deferred impact of the two months moratorium and that was in November, December post demonetization with another big component that was Section 269ST regarding the 2 lakh limit on cash transaction.
  • Gross NPAs have gone to 0.38% despite all the impact of the things happening around
  • The changes during Q3 – Q4 of last year till Q1 the company has managed the gross NPA in terms of risk weight at 0.38%. It used to be 0.24% previously
  • Net NPA is 0.17% compared to 0.04 in previous June and the provision coverage is lower coming up at 55% in terms of NPAs cost.
  • The NPAs from 188 accounts is amounting to 29.5 Cr as in March for recovery in Q1 so it gives the company nine months period to get this account off the books.
  • Part of the accounts will be upgraded by recovery and part of the accounts are planned to be  knocked off and these accounts particularly where the overdue continues to be over 60 days and the cost of freezing these accounts standard comes up much higher compared to the earnings that is made from them.Blended Yield

Blended Yield

  • Overall yield of the company has been around 10.59% and only 10% of the incremental is for non-housing, and around 12.5% to 13% on non-housing.
  • This is the average of the entire book.
  • Rate of borrowing is on an average 7.84% compared to 8.65% in previous June, last financial year it was 8.35%, showing a substantial dip due to new base for Q1, it is 7.84% of the incremental cost of borrowings for CanFin.
  • The spreads have gone up from last year’s 2.61% to current spread which is 2.75%.
  • Marginal yield has come down from 10.96 to 10.59 and the cost has come down from 8.35 to 7.84. This is compared to the last full year and current year first quarter.

Disbursements and Sanctions 

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  • 7200 loans have been disbursed this quarter.
  • 95% of the sanctions qualify in the affordable segment.
  • Of the total housing, individual housing that has been lent, of which 95% is in the income range up to 18 lakhs and 53% is in the range of up to 6 lakhs that is it may be within the range of 3 to 6 lakhs.
  • CLSS has been applied wherever applicable as for CLSS income is not the only criteria.

Branch Expansion Strategy 

Canfin Homes Q1FY18 Branch Network.png
  • Six branches and head offices have been added this quarter.
  • 11 branches and 10 satellite offices have already been approved which leaves six more satellite offices and five more branches to go.
  • 21 new outlets have been planned to be opened during the year out of which 10 have been opened in Q1 itself.
  • Cost to income ratio has dipped a little due to the above expansion strategy.
  • Stock split is linked to the postal ballot which is expected to be there in the Q3.

Interest rates

  • Interest rates for existing loans cannot be reduced as the interest rates have been allotted based on the risk rating, for which the borrower needs to pay the risk premium.
  • CanFin is the first HFC, which has gone for an annual resetting mode.
  • Interest rates will be reset annually based on the risk category.
  • The subsidy received through CLSS will be transferred to the customer’s account resulting in the reduction of loan amount and EMI.
  • Loan origination from resale and self-construction ranges from 9% to 12%.


Canfin Q3FY17 Concall Summary

Canfin Homes Logo

Performance Highlights

Can Fin Homes Q3FY17 Performance
  •  Q3 FY 2017 is a perfect new year beginning for the company.Growth in outstanding Loan book is 28.2%
  • Revenues are gone up by 26%. Exp are around 20%. NII Grew 39% for the Quarter.PAT grew 41%
  • Fresh Sanctions are up by 43%. Disbursements are up by 31%
  • Impact of demo was not that much, except for in November
  • Lowering of cost of borrowing 9.1% Dec 2015 to 8.48% in Ded 2016
  • Spread has improved by 40 bps. 2.12 to 2.52
  • NIM stands at 3.5%
  • Per Branch business is stretching up to 100 crore per branch.
  • Cost to Income ratio has reduced by 180 bps. From 19% to  17.15%.
  • Priority is still on the salaried class. It constitutes 77% of the  total loan portfolio
  • Of the Portfolio, 88% is housing and 12% is  non-housing
  • For Canfin, the collections are done by banking medium so demonetisation has not affected much.
  • CP is 19% of the total borrowings.

    Asset Quality  

  • Net slippage is Rs. 31 Lakh for the Quarter on entire loan  book
  •  Gross NPA 0.24% vs 0.27% last year and Net NPA 0.01 vs 0.04% last year
  • PCR is 94%
  • CAR -18.76. Asset Quality has been good.
  • LTV in LAP Book is below 50%.Balance transfer cases are more in higher risk profile borrowers
  • Majority of the customers are long standing customers.
  • Current year 9 Months slippage is less than QlFY 16. So, asset Quality is getting maintained
  • Last year there was a writ e-off of 3 Cr. This year, there is no write -off

Marginal cost of funds

  •  Cost of Funds is 8.48%. Yield on advances is 11%
  • Banking portfolio is now repriced at a lower rate and the NCO is dependent on money market
  • Rates Cut will be passed on. Broadly, Margins are expected to be maintained

    Customer Addition:

    •  Things are improving on customer addition front
    • Average Ticket size is 18-20 Lakhs and LTV is 70%
    • Incremental age of borrowers is 40-41 years. This means that this could be the first house of the borrower and so the delinquency rates are lower.

     Benefit of Interest Subvention Scheme of the government

    • Average Ticket size in Metro cities is 30-35 Lakhs.
    • Average ticket size in non metro cities is 10 -15 Lakhs. This Segmentis roughly more than 50% of the total. This segment will benefit from Govt. Scheme
    • Overall the subvention is a very positive move.

     Prepayment trends due to competition

    • Company has a loyal base of customers
    • Even though Canfin is offering loans at higher rates compared to bank, still customers are there
    • This difference between lending rates has always been there. But Co. stays competitive and passes on the benefit as and when possible
    • Existing customers can avail of new (lower ) rate by paying interest differential amount, which is 15000 or 0.5%, whichever is lower
    • Prepayment rates on Housing loans is less than 17%

     Rate Cuts

    • Rate cut of 75 Bps is for new sanctions
    • The company feels that it is insulated from sharp rate cuts by banks. Even earlier, Canfin used to charge 40-50 Bps above the banks. And now the rates are even more competitive due to rate cut. So there is no customer behaviour change
    • Repricing of loans from banks has been done, but high cost NCDs  continue
    • Fee income and other income declined
    • When a rate cut happens in a Quarter, to compensate the interest differential, other income increases. Similar ly when there is no cut, other income remains normal
    • Also in this Quarter, there was festive offer.
    • By the same logic, Q4 may see a jump in other  income


    • Growth should be better from now as rate has been cut. Rate cut matters to low income salaried class
    • During November, there was a dip in growth, but enquiries have improved
    • No branch additions planned for this year, but satellite centres will be converted

     Sourcing and Borrowing Mix

    • Direct and DSA (Direct Selling agents) both account for  50:50
    • But Incrementally, Direct is expected to improve to 55%
    • In Metros, DSA contribution is higher at 50-60%
    • Commission is 0.35% for housing 0.5% for non  housing
    • Borrowing mix - 50% is from banking and NHB, and 48% from money market
    • Geo graphical mix - 74% South. Karnataka is 46%, TN is 16%, Telengana is 18% and Kerela is 2.5%. 20% is from NCR and some from Gujarat

    Disbursements and Yield

    • Compared to December-16, there is a growth rate of 25% in disbursements
    • The company follows Risk based pricing. The lowest risk category borrowers get best pricing
    • Avg.Yield for 9 months is 9.75% for Home loans and 13.5% for non home loans
    • Conversion of loans or re-pricing generally takes time
    • The company has not reduced rates in Dec. Quarter. Now it is reducing 25 bps for the housing segment.
    • Rural housing is 12% of the loan book
    • As of now there is less supply in housing sector and with government also providing benefits to developers in this segment, supply is expected to pick up
    • The company does not finance where the project is not  ready


    • Average age of employees is 32-33
    • Average age of Incremental borrowers is 40-41. Average age of Top management is 50

     Borrowing Cost

    •  Incremental Borrowing cost will be lower . It stands at 8.48% vs 8.75% in March. And for companies like Canfin, where there is no casa deposit, it will help


    • The Company continues to have a guidance of 13500 Cr Loan book For FY 2017
    • Q4 and the coming year is expected to be better for generally all the housing finance companies
    • Satellite branches are converted to loan centres. Co. will add 10 more each quarter.

    Shriram Transport Finance Q3FY17 Concall Summary

    STFC Logo

    Performance Highlights

    STFC Q3FY17 Performance
    • Company raised 650Cr through Masala bonds at 8.5% coupon rate with tenure of 12 months listed in Singapore stock exchange
    • India is moving towards BS4 vehicle which will increase the price by 50,000-200,000 by 1 April 2017, which in turn will increase the loan demand before 31st March.
    • New or young vehicle will be in demand due to increase in diesel prices.  
    • Cost to income ratio will be 22-23% due to increase in employee cost but company expects to maintain this rate between 22-24% over longer term
    • Company is focussing on establishing sustainable relationship with people in rural areas to mitigate the impact of demonetisation
    • Shriram equipment finance book size is 1157Cr, and NPA is 890Cr. Total segment-wise Disbursement - New vehicle 565Cr, used vehicle 7560Cr
    • The demand in this quarter demand is expected to be driven by passenger vehicles
    • ROA will increase if credit cost declines from next year. Full impact of such decline will be seen in FY19

    Asset Quality

    STFC NPA Analysis
    • GNPA (Gross Non Performing Assets) is 6.63% this quarter. If the company would not have followed RBI guidelines it would have been 7.3%, which is 448 Cr of addition in GNPA
    • NPA recognition on a 180 dpd basis upto Q3 FY16
    • The company has transitioned to NPA recognition on a 150 dpd basis from Q4 FY16
    • Provision Coverage Ratio (PCR) on 150 dpd NPA at ~70.45% in FY16 and 75.44% as on Q3 FY17
    • Pursuant to the amalgamation of Shriram Equipment Finance Co. Ltd. – NPA (on 150 dpd basis) of Rs. 893 Cr have been included in the standalone financials for FY16

    Employee Count

    STFC Employee County Q3FY17
    • Company is considering addition of 1500-2000 in manpower by Quarter end, as demand is expected to be healthy in Q4.
    • In the last 9 months, 600 people from Equipment finance quit job after merger. Rest around 2,000 personnel quit due to seasonal and other reason

    Used Vehicle Segment

    • The focus is on vehicle aged between 5-10 years, 3-7 years being the focal point. At the same time discouraging finance for vehicles that are older than 10 years
    • Banks are usually reluctant to enter into used vehicle segment as it requires more expertise, good valuation, proper documentation and reach in the market.
    • Company has 90% used vehicle and 10% new vehicle in books. The composition is expected to remain same going forward with maximum percentage of new vehicles touching 15%, may be
    • Customers using Used Vehicles will not shift to BS IV

    Effects of Demonetisation

    • The cash component in collections was 60% but the situation remained in control. There were short term disruptions in initial days following demonetisation but soon thereafter customers began paying by cheques or online payment portals
    • They introduced an app for online payment and also set up Point of Sale (POS) machines in the branch and field offices to enable payments through debit cards
    • Monsoon was good and sowing was robust
    • Loan disbursement was lower by 22% YoY mainly because transaction in vehicles was delayed over uncertainty over cash withdrawal or cheque payments
    • January is going good, collections are improving, more and more people are paying through non cash channel
    • Securitisation slowed down with banks due to demonetisation, expect to do Rs.2000Cr this quarter
    • Impact on smaller vehicle segment which is based mainly in rural market was maximum whereas large vehicles or vehicles in urban markets did not suffer much. Collection efficiency was around 90% in Q3 FY17
    • Cash collections have reduced by 40% compared to last month

    Impact of GST Act

    • GST is set to improve the per day run of Indian vehicles which is just 200 Kms as compared to 800 Kms of International average
    • Growth in demand of vehicles is expected as more and more companies will adopt just in time system for inventory which will lead to lesser usage of warehouse and higher use of transportation
    • Past trends have indicated that the number of vehicles increases in countries where GST is implemented
    • New vehicle sales will be lower in Q1 due to uncertainty over GST