Arman Financial Services Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Arman Financial Services Limited (ARMANFIN) Q4 FY22 Earnings Concall

Q&A Highlights:

• Amit Mantri of 2Point2 Capital asked about the reasons for yield spiking in 4Q22. Aalok Patel Joint MD replied that it’s due to the portfolio securitization transaction of INR100 crores uploaded to SBI. Under the Ind AS requirement, the gain on such transaction needs to be booked upfront.

• Savi Jain from 2Point2 Capital enquired about the loss the company has taken through the other comprehensive income. Aalok Patel Joint MD replied that on the Ind AS, the overall interest rates have gone up and based on that the OCI will turn out to be a notional loss.

• Piyush Jain with Hansraj Virendra Capital asked about the new geographies ASRMANFIN is expanding. Aalok Patel Joint MD said the company expanded to Haryana early this year; have 18 branches there. Opened up around 12 odd branches in Bihar.

• Piyush Jain with Hansraj Virendra Capital also asked that on the new geographies how does the company see the market with respect to Gujarat market. Aalok Patel Joint MD said in new areas, in Haryana the potential for rapid growth is limited. In Bihar, it’s concentrated and will take time to comment on growth there.

• Sachit Motwani from Param Capital asked about April, May disbursement, which has been slow for competitors due to RBI’s new guidelines. Aalok Patel Joint MD replied that it’s been the opposite for the company. The disbursements are quite high and the demand is also quite high. Only operationally it has been challenging.

• Sachit Motwani from Param Capital enquired if the cost to income ratios will further moderate down. Aalok Patel Joint MD clarified that it’s very much possible as now that the company is charging higher interest rates and the operating cost will not increase to a large extent.

• Sachit Motwani from Param Capital asked about the other income being higher in 4Q22 and liquidity expectation on balance sheet. Aalok Patel Joint MD answered that it’s because the liquidity has been generally high. ARMANFIN would like to have as much liquidity as possible on balance sheet.

• Sachit Motwani of Param Capital asked about long term thoughts on two wheeler book, if ARMANFIN is looking at scaling this to INR200-300 crore AUM. Aalok Patel Joint MD said that the market conditions are such that it’s on ice at the moment. As the conditions improve, ARMANFIN will take a call on it.

• Sachit Motwani of Param Capital asked about any scale up on the MSME segment. Aalok Patel Joint MD replied that ARMANFIN is trying to scale up and it takes a kind of unique customer. The company is currently growing at a 35-40% on a YonY basis and that should continue for the years to come.