Spandana Sphoorty Financial conducted a conference call on 24 July 2023 to discuss its financial results for the quarter ended June 2023. Shalabh Saxena, MD&CEO of the company addressed the call:

Highlights:

This is the fifth quarter since the new management has taken over and the company has come a long way. The company had presented the vision 2025 and highlighted its 5 priorities. The company has made significant progress on these priorities.

First the people, the company have filled all 13 key positions and the company is also adequately staffed. The hiring agenda of the company is complete now and the focus is on introducing the people centric policies to become a preferred employment company.

Second is strengthening governance, risk and control and refining processes.

Third the focus on customer acquisition led group. The company added 8.8 lakh new customers in FY2023 and further added 2.6 lakh new customers in Q1FY24. The company aims to add 1 million customers in FY2024 and raise the customer base to more than 3 million customers by March 2023.

Fourth is the technology scale up to provide end to end services. The company expects the technology to drive the next phase of growth.

Fifth is customer focused initiatives with emphasis on new products and services. The company has introduced loan against property in Rajasthan. It will soon launch nano enterprise loans in select geographies.

The company is expecting 15 to 20% improvement in the efficiency in the current distribution.

The company is targeting seven states – Rajasthan, Uttar Pradesh, Bihar, Gujarat, West Bengal, Haryana and Tamilnadu for growth, where the company has low market share.

In the last one year the company has added 188 branches mostly in this 7 states. About 26% of the new borrowers added were from these seven states in Q1FY24.

A company wants to have 1500 branches by end March 2025.

The disbursements of the company increased 26%s to Rs 1664 crore in Q1FY24. The first quarter is seasonally weak quarter for the microfinance industry.

The AUM jumped 60% to Rs 8848 crore end June 2023.

The borrowings stood at Rs 1540 crore in Q1FY24. The company has witnessed marginal decline in the marginal cost of borrowings to 12.3% from 12.6% in the previous quarter.

The asset quality continues to improve and the standard loan book stood at 97% up from 68% in Q4FY22.

The gross collections stood at 101.5% in Q1FY24.

The company targets loan book of Rs 15000 crore by March 2025, while expects to raise loan book to Rs 11750-12000 crore by March 2024.

The company expects to maintain margins at 14% and yields to stabilize at 24%.

The credit cost is expected at 1.5-1.6% for FY24

The cost to income ratio is expected to be 35-39%

The ROA is targeted to improve above 4% in the long term.