Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Star Housing Finance Ltd (BOM:539017, Financial) reported a strong year-on-year growth of 62% in assets under management, reaching INR 517.84 crores.
- The company has maintained a low gross non-performing assets (GNPA) ratio of 1.56% and net non-performing assets (NNPA) ratio of 1.09%, indicating strong asset quality.
- Net interest income increased by 47.83% year-on-year, reflecting effective financial management.
- The company has a robust collection system, maintaining a collection efficiency of over 99% month-on-month.
- Star Housing Finance Ltd (BOM:539017) is expanding its branch network and investing in technology to enhance operational capabilities.
Negative Points
- The portfolio at risk stands at 3.68% for accounts that are zero plus deals, which could indicate potential future challenges in asset quality.
- The average cost of borrowing is relatively high at 12.2%, which may impact profitability.
- The company has not engaged in any securitization transactions this quarter, potentially limiting liquidity options.
- There is a reliance on a limited number of banks and financial institutions for borrowing, which could pose a risk if market conditions change.
- The company faces challenges in maintaining a steady interest regime for customers, which could affect customer satisfaction and retention.
Q & A Highlights
Q: How does Star Housing Finance manage the asset quality of its book and diversify its funding profile?
A: Anoop Saxena, COO, explained that the company has a robust collection system involving pre-calling, regular follow-ups, and customer awareness programs to maintain high collection efficiency. Natesh Narayanan, CFO, added that the company has diversified its funding with liabilities from six banks and 11 financial institutions, including a vibrant NCD program.
Q: What is the split between on-book and co-lending portfolios, and what is the turnaround time for processing online applications?
A: Anoop Saxena, COO, stated that 10% of the portfolio comes from co-lending, while 90% is on-book. The turnaround time for processing applications is about 15 to 16 working days for 80% of cases.
Q: Can the current growth momentum in disbursements be sustained in the coming quarters?
A: Kalpesh Dave, CEO, mentioned that traditionally, the second half of the year sees higher disbursements. The company plans to maintain this momentum, contingent on effectively managing its funding pipeline.
Q: Has Star Housing Finance conducted any securitization transactions this quarter?
A: Kalpesh Dave, CEO, confirmed that no securitization transactions were conducted during this quarter.
Q: What is the company's strategy regarding increasing its yield?
A: Anoop Saxena, COO, explained that the company aims to maintain a steady interest regime to ensure customer understanding and maintain collection efficiency. The focus is on increasing spreads through strategic initiatives rather than altering interest rates.
Q: What is the cost of funds and the margin on the portfolio?
A: Natesh Narayanan, CFO, stated that the average cost of funds is 12.2%, with a portfolio yield of around 17.4%, resulting in a margin of approximately 500 basis points.
Q: What is the typical customer profile, and how do they learn about Star Housing Finance?
A: Anoop Saxena, COO, explained that 80-85% of business comes from direct sales, with the rest from networks like property brokers and agents. Marketing activities generate leads. Kalpesh Dave, CEO, added that customers are typically entrepreneurial, with stable cash flows.
Q: What is the shareholding pattern, and are there any changes expected?
A: Kalpesh Dave, CEO, advised checking the company's website for detailed shareholding information and mentioned that any changes would be subject to shareholder and board approvals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
