18-20% growth can be expected in terms of Disbursements in the upcoming years.
Q2 Disbursements were at an all-time high. Up by 153% Y-o-Y.
Last year rates were dropped to compete with big banks entering the housing finance business and other HFCs. This strategy helped the business to gain traction.
This helped the business to: Gain new business and secondly to protect the existing book.
In the previous quarter, rates were increased a bit. Still, this led to all-time high disbursements and an increase in the overall loan book.
Margins will increase and yields will increase in upcoming quarters leading to an increase in revenue and PAT as well.
H2 will be far better than H1 as Q1FY22 was partially down due to lockdowns. Q3 and Q4 will be far better than Q2 FY22.
Despite of 28% moratorium, there was no increase in NPA numbers. Max 7-8% of the restructured book of 645 crores will flow to NPA’s, which is just an estimate. Pre-payments are expected from the restructured customer base.
82% salaried and 18% non-salaried customer base. No issues are currently seen in both salaried and self-employed customer bases in terms of repayment.
Out of the total salaried customer base, 50% private and 50% government salaried customer base.
More demand is from the Salaried customer base. When the company decreased rates last year, demand increased from the salaried customer base and average -ticket size also increased.
65-35 mix ratio is what is ideal for incremental borrowings between salaried and self-employed customer base.
Top 20 and 30 branches contribute 65-70% of the total incremental disbursements.
The average income of the customer base is approx. 40,000 Rs.
Total provisions are for standard, restructured and NPAs as of Sept 2021.
Costs are coming down on overall basis. Average cost of borrowings from banks is at 5-5.25%. Credit costs to be remain compressed in the remaining quarters.
Average lending rates are at 7.75%.
Commercial papers are only for cost leverage purpose and not for core fundings. Commercial Papers are riskier and are more for short term.
Plan to raise 700-750 crores in Second half of the year. Additional funds will be raised through NCD’s
A Years obligation is always kept as liquidity for conservative purpose. Approx. number stand at 4,000 crores in Q2 FY22.
Because of such conservatism, it helps the company to negotiate well when it comes to borrowing funds.
Incremental Cost of Borrowings 4.77% and Incremental Yields are at 7.45%. Both spreads and NIM’s will go up in the remaining half of the year.
No specific reason to increase the coverage ratio. 40% coverage ratio provides good comfort and the same can be expected in the upcoming quarters.
Pricing strategies are been keenly focused when it comes to disbursements in tier 2 and tier 3 cities.
Networks and branches:
Networks and branches were not able to be opened in the last year. Planning to open 12-15 branches every Financial Year.
Collaborations and Tie-ups:
No tie-ups and collaborations are currently in the pipeline but views are open if there are any such opportunities.
Strong Team Buildup:
Teams have been kept for the respective categories to focus on.
Couple of teams have been built to focus on customers who want to switch out. This helps the company to increase the customer retention ratio.
Better support from the government is received till now and the same is expected to be received in the affordable housing segment in the upcoming years.
Better prospects are expected in the affordable housing segment owing to better budgetary allocations from the government in the future.
No challenges are been seen for this segment in the future 3-5 years.