Key highlights from Arman Financial Services Limited (ARMANFIN) Q1 FY23 Earnings Concall
Q&A Highlights:
- Shubham Ajmera from Soic Ventures asked if the company has increased interest margin for the risky customers during 1Q23 and future plans. Jayendra Patel MD replied that during 1Q23 the rates were increased by about 2.5-3% from 4Q22. In 3Q23, the company expects to raise interest by a small margin by 25-50 bps.
- Shubham Ajmera from Soic Ventures enquired about impairment losses and if impairment cost will not be as much vs. previous few quarters. Jayendra Patel MD said that as the portfolio keeps increasing the provision should increase. Also, the quantum of impairment losses will not be as high as it has been. In this business 1-2% loan losses is to be expected.
- Devashish asked about the net NPA numbers realistically. Jayendra Patel MD replied that the goal is to always maintain sufficient provisioning. And now that pricing gaps have been removed by the RBI, it’s prudent to be much more conservative in terms of provisioning requirements. The hope is to keep net NPA levels to less than 0.5% to zero.
- Devashish asked that given the fund raise, till what level of AUM the company feels is done with the capital raise. Jayendra Patel MD replied that assuming all regulatory and shareholder approval goes through, ARMANFIN is confident of reaching at least INR2,400-2,500 crores based on the most recent fund raise.
- Srinath V with Bellwether Capital asked how the business has changed with the new rules. Jayendra Patel MD replied that the company is still collecting on a group level and trying to go for cashless collection in some of the portfolios.
- Srinath V of Bellwether Capital also asked if the company has started looking at the deeper rural geographies where there were cost issues. Jayendra Patel MD clarified that moving to deeper rural is one of the company’s strategies. It is in the works and will be updated about it in future.
- Srinath V with Bellwether Capital asked about MSME, what’s the broad growth and AUM outlook for next one year. Jayendra Patel MD answered that MSME has picked up a bit. And it’s unfair to compare MSME growth to micro finance. In MSME, ARMANIF has growth from a low point of INR113 crore in 1Q22 to INR181 crore in 1Q23.