Q1 2027 India Shelter Finance Corporation Ltd Earnings Call Transcript
Key Points
- Gross AUM grew 24% year-on-year to Rs 11,284 crore, with management confident of achieving 25-30% growth for FY27.
- Net interest income rose 30% year-on-year, driven by AUM growth and a 20 bps improvement in spreads.
- Return on equity remained strong at 17.5%, up 30 bps year-on-year, with ROA above 5%.
- Operating efficiency improved with OpEx-to-AUM down 10 bps year-on-year to 4% and cost-to-income at 36%.
- Liquidity is comfortable with over Rs 800 crore in liquidity and Rs 1,500 crore in undrawn sanctions, with a diversified borrowing profile and positive ALM across all buckets.
- AI initiatives are being embedded across operations, collections, and customer service, improving productivity and enabling scalable growth.
- Disbursement momentum is strong, with July disbursements exceeding March levels, supporting the 25-30% AUM growth guidance.
- Credit cost guidance of 40-50 bps is maintained, with stable LGDs and a strong collection mechanism in place.
- The company raised Rs 172 crore from National Housing Bank at a competitive 7.3% rate, and incremental spreads are higher than portfolio spreads.
- The change in disbursement recognition to check realization is a one-time accounting adjustment with no P&L impact, enhancing operational transparency.
- Reported disbursements fell to Rs 641 crore due to the one-time accounting change, masking the underlying growth of 36-37% year-on-year.
- Asset quality deteriorated with Stage 3 assets rising to 1.5% and early delinquency (30+) increasing to 5.2%, with management expecting stabilization only by Q2 and recovery from Q3.
- Collection efficiency dropped to 97%, with April particularly weak at 96.2-96.4%, and management expects Q2 to remain flat before improvement.
- Disbursement growth on a like-to-like basis was only 18% year-on-year, lower than peers, raising concerns about growth sustainability.
- The company added 160 employees without opening new branches, indicating a focus on collections and technology rather than expansion, which may pressure costs.
- The lower-ticket segment (up to Rs 7-8 lakh) continues to show higher stress, with GNPA in that cohort rising to around 2% from 1.45% two years ago.
- The transition to check realization will continue to cause timing differences in disbursement recognition for the next 2-3 quarters, potentially affecting reported growth metrics.
- Management expects Stage 3 to remain at Q1 levels in Q2, indicating no immediate improvement in asset quality.
- The company's reliance on self-employed customers (85% of book) exposes it to seasonal and economic volatility, as seen in the current stress.
- Incremental borrowing costs are rising, with bankers asking for 20-25 bps higher rates, which could pressure spreads despite passing on some costs to customers.
Ladies and gentlemen, good day and welcome to the India Shelter Q1 FY27 Earnings Conference Call hosted by ICICI Securities Limited.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during this conference call, please signal an operator by pressing then 0 on your touch tone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Ranesh Bhuva from ICICI Securities.
Thank you and over to you sir.
Thank you. Yeah. Hi, good morning everyone and welcome to India Centre Finance Q1FY27 Ranesh Call. On behalf of ICICI Securities, I would like to thank India Centre Management Team for giving us the opportunity to host this call. Today we have with us the entire top management team of India Centre, represented by Mr. Pindar Singh, MBA and CEO, Mr. Ashish Gupta, CEO.
I will now hand out the call to Pinderji
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