Q1 2027 Aadhar Housing Finance Ltd Earnings Call Transcript
Key Points
- AUM grew 18% YoY to INR31,364 crores, with disbursements on a like-to-like basis up 19% YoY, and management reaffirmed medium-term guidance of 20% AUM and profit growth.
- Asset quality improved: Gross NPA fell to 1.31% (down 3 bps YoY) and Stage 2 assets declined 40 bps YoY to 3.3%, with collection efficiency at 99%.
- Spreads remained stable at 5.8% despite a 15 bps RPLR cut, supported by a strategic tilt toward higher-yielding emerging market branches (yields of 14%-14.8% vs. 11.5%-12% in urban areas).
- Balance transfer out (BTO) improved to 5%, the lowest in 8-10 quarters, reflecting successful retention efforts and data-driven customer engagement.
- Strong capital position with CAR at 42.9% (Tier 1) and low cost of funds (exit cost at 7.7%, down from 8% YoY), providing ample headroom for growth.
- Transition to cheque clearance basis for disbursement recognition enhances governance and transparency, aligning with RBI circulars and industry best practices.
- AI initiatives across a 6-layer architecture are expected to drive productivity gains and cost efficiencies, potentially improving cost-to-income further.
- Disbursement growth on a reported basis was lower due to the transition to cheque clearance recognition, with Q1 reported disbursements at INR2,036 crores vs. INR2,359 crores on a handover basis.
- Employee costs rose 27% YoY, partly due to INR14 crores of ESOP charges and annual increments, pressuring cost-to-income ratio to 36.3%.
- Geopolitical uncertainty in West Asia and monsoon risks could impact segments like fuel-dependent trade and travel, potentially affecting asset quality in non-home loan segments.
- Non-home loan disbursements were deliberately curtailed due to perceived higher risk, leading to a temporary shift in product mix (76:24 vs. historical 70:30), which may limit growth in this segment.
- Credit costs are seasonally elevated in Q1 (40-45 bps), and management expects them to settle at 23-25 bps by year-end, implying potential volatility in near-term earnings.
- Management has no plans to return excess capital to shareholders despite high CAR, which may continue to drag ROE (currently 14.7%) compared to peers.
Ladies and gentlemen, good day and welcome to Aadhar Housing Finance Q1 FY 2027 Earnings Conference call hosted by DAM Capital. [Operator Instructions]. I now hand over the conference to Mr. Sanket Chheda from DAM Capital. Thank you and over to you, sir.
Yeah, very good evening to all of you. We have with us management team of Aadhar Housing to discuss Q1 results. From the management side, we have Mr. Vijayanand, who is the AMC; Mr. Rajesh Viswanathan who is the CFO; and Mr. Sanjay Mulchandani, who is the head of FBA and Investor Relations. We also have Deo Shankar Tripathi, who is the Executive Vice Chairman. Without further delay, Iâll hand the call over to Rishi sir for his opening remarks. Weâll follow that up with questions and answers. Over to you, sir.
Thank you so much, Sanket, and a very good evening to all of you. Thank you for joining us today to discuss
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