Financial Performance:
– Loan Book: Reached Rs. 137,011 million, an 8.3% YoY growth.
– Profit After Tax (PAT): Rs. 1,054 million, representing an 18.3% YoY increase.
– Return on Assets (ROA): 3.1% for Q1 FY25.
– Return on Equity (ROE): 16.3% for Q1 FY25.
– Net Interest Margin (NIM): Maintained at 5.1% for the quarter.
– Yield on Assets: Increased to 12.0% in Q1 FY25 from 11.5% in Q1 FY24.
– Cost of Funds: Rose to 8.6% in Q1 FY25 from 8.2% in Q1 FY24.
– Spread: Remained stable at 3.4%.
– Cost to Income Ratio: Decreased to 23.6% from 26.3% in the previous quarter.
– Other Income: Increased significantly due to interest income from investments and G-Sec securities.
Operational Performance:
– Disbursements: Rs. 6,804 million in Q1 FY25, relatively flat compared to the previous year.
– Sanctions: Rs. 7,272 million, slightly lower compared to the previous quarter.
– Gross Non-Performing Assets (GNPA): 4.3%, slightly higher compared to the previous quarter mainly attributed to the heat wave in April.
– Stage 3 Provision Coverage Ratio: 61.8%.
– Stage 2 assets: Remained stable at 11.7%.
– Branch Network: Increased to 223 branches (including satellite centers) as of June 30, 2024, adding 10 new branches since the end of FY24.
– Geographic Diversification: Tamil Nadu contributes 56% of the loan book, with efforts to increase exposure outside the state.
Future Outlook:
– AUM Growth Target: Aiming for Rs. 15,000 million AUM by March 2025, organically.
– Disbursement Target: Planning for disbursements between Rs. 3,600 to 3,800 million by the end of FY25.
– GNPA Reduction Target: Aiming for a GNPA of 3% by year-end.
– Stage 2 Target: Aiming to bring Stage 2 assets down to 10%.
– Growth Strategy: Focusing on increasing sales staff and diversifying sourcing channels to drive growth.
– Focus on Home Loan Segment: Aiming for controlled growth in the home loan segment, with a possible offering of competitive pricing to salaried customers.
– Capital Adequacy: Management believes the current capital is sufficient to support planned growth and does not indicate plans for further dilution or significant dividend increases.
– NHB Loan Application: RHFL plans to apply for NHB loans post their AGM and filing of numbers with ROC.
Concerns (if any):
– Disbursement Growth: Analysts expressed concern regarding flat disbursement numbers in Q1 FY25 and the ability to achieve ambitious future targets.
– Competition: The management acknowledges the stiff competition in the home loan market, especially from small finance banks and microfinance institutions.
– Pressure on Yields: While RHFL has passed on increased costs to customers, they anticipate potential difficulties in maintaining the spread if cost of funds continue to rise.
Other Important Points:
– Quality Focus: Management emphasized their focus on maintaining asset quality and conscious growth, as opposed to solely chasing high growth numbers.
– Experienced Hiring: RHFL is actively recruiting experienced sales and collection staff to bolster operations and drive growth.
– Tech Upgrade: Investments have been made in technology upgrades to improve operational efficiency.
Credit Costs: Management expects credit costs to be under control in FY25, anticipating a possible reversal of provisions
