Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- June was the second-best month in terms of disbursements in the last 15 months, indicating a positive trend.
- The company is confident of achieving INR 2,500 crore disbursement in Q2 FY25.
- Positive growth in disbursements across all states except Andhra Pradesh and Telangana.
- The company is targeting a disbursement of INR 10,500 crores for the year, indicating strong growth expectations.
- The company has implemented process changes and internal controls, which have now stabilized, allowing for a focus on business growth.
Negative Points
- Disbursements were down by 6% in Q1 FY25 due to a slow start in April and May.
- Gross NPAs increased by INR 39 crores in Q1 FY25, compared to an increase of INR 31 crores in Q1 FY24.
- Higher borrowing costs in Q4 FY24 have carried over into Q1 FY25, impacting spreads.
- Incremental IT expenses and increased CSR budget have led to higher overall expenses.
- The company has not raised any funds from NHB in FY24 and Q1 FY25, which could have provided lower-cost funding.
Q & A Highlights
Highlights of Can Fin Homes Ltd (BOM:511196, Financial) Q1 FY25 Earnings Call
Q: How has the disbursal trend been in July, and is there any geographic concentration where collections have been weak?
A: Disbursements in July have been positive, similar to June. There is no specific geographic concentration of weak collections; the increase in NPLs is spread across all regions.
Q: What led to the sharp increase in cost of funds, and how do you see it trending for the rest of the year?
A: The increase in cost of funds was due to higher borrowing rates in Q4 of last year. We expect a slight improvement in Q2 due to repricing benefits and potential lower-cost funds from NHB.
Q: Can you provide more details on the expected growth and loan book target for March 2025?
A: We are targeting INR10,500 crore in disbursements for FY25, which should result in a net addition of around INR5,500 crore to the loan book, aiming for a total of approximately INR41,000 crore by March 2025.
Q: How much of your bank loans are linked to Repo and EBLR?
A: Approximately 40% of our bank loans are linked to Repo and EBLR.
Q: What measures are being taken to increase disbursements and improve loan book growth?
A: We have implemented a separate marketing team for direct sourcing, strengthened digital marketing efforts, and introduced a zonal office structure to enhance disbursement capabilities and sanctioning authority.
Q: What is the company's strategy for growing its loan book, particularly in the salaried segment?
A: We aim for a 15% growth in the salaried segment, which constitutes around 73% of our book. We are also focusing on increasing business in the self-employed segment.
Q: Can you explain the difference between CLSS and the Affordable Housing Fund (AHF)?
A: CLSS provides interest subsidies to end consumers, while AHF offers lower-cost funds to lending institutions for onward lending to affordable housing segments. Both aim to spur demand and provide funding for affordable housing.
Q: What is the current status of the restructured book, and do you expect any further slippages?
A: The restructured book has come down to approximately INR580 crore, with around 18% classified as NPL. We do not expect significant further slippages.
Q: What is the guidance for cost-to-income ratio for FY25?
A: We are targeting an 18% cost-to-income ratio, depending on the timing of our second phase of IT upgradation. If delayed, it could be around 16%-17%.
Q: What are the expected steady-state spreads and margins for FY25?
A: We continue to hold a spread guidance of 2.5% plus and a margin of 3.5% for FY25.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
