Can Fin Homes conducted a conference call 30 April 2024 to discuss its financial results for the quarter ended March 2024. Suresh Iyer, MD and CEO of the company addressed the call:

Highlights:

The company has a witnessed decline in the disbursements over a year ago, but sequentially disbursements have jumped 23% in Q4FY2024 leading to monthly disbursement run rate of Rs 754 crore. This gives the confidence to the company to grow the disbursements and asset under management going forward.

The company has exhibited decline in the GNPA ratio from 0.91% end December 2023 to 0.82% end March 2024. The restructured loan GNPA accounted for 0.55% indicating that increase in GNPA was mainly account of restructured loan book.

Even in the restructured loan book, the GNPA book has reduced to Rs 92 crore from Rs 96 crore in the previous quarter. This gives confidence that there would be no further slippages from the restructured loan book and only the normal slippage run rate would continue.

It five months since the entire restructured loan book has come out of moratorium. So no further slippages are expected from the restructured book.

The company has continued to carry the management overly provisions of Rs 34 crore and covid related provisions of Rs 58 crore.

The company has continued to maintain healthy spreads of 2.67% in Q4FY2024.

The entire loan portfolio was repriced in January 2024 and the company has also moved to quarterly reset of interest rates.

The RoA was at 2.28% and RoE at 17.28%.

The company is focusing on pushing up the disbursements and it is targeting 15% loan growth for FY2025.

The company is targeting spreads of 2.5% and the margins of 3.5%.

The company has shifted from annual reset to quarterly reset and the company would pass on the benefits of the any reduction in the interest rates to the customers.

Due to tight liquidity conditions, the company witnessed 5bps increase in the cost of borrowings to 7.4% in Q4, while the yield also increased by the similar quantum.

The disbursements in Q3 and Q4 were mainly impacted due to the process changes. The system has streamlined and no further impact on disbursements is expected going forward.

The company has made expenses of Rs 5 crore relating to the IT during Q4FY2024.

The company is targeting cost to Income ratio of 18% for FY2025.

The company is target disbursements of Rs 11000 crore for FY2025, translating to 30% growth. If the company sustains similar growth in disbursements in FY2026, the loan growth would further accelerate to 18%.

The company is also looking at 5% growth in the number of loan applications in FY 2025. The overall disbursements growth target of 30% would be driven by inflation and the focus on higher ticket loans.

The company is targeting RoA of 2.2% for FY2025.

The yield on the self employed segment is 50 bps higher than the salaried segment. The company targets customer is with 2 year IT returns in the self employed segment.

On average, the company is paying 43 bps as a DSA commissions.

The company aims to reduce the share of DSA loan book to 60% from existing 72%.