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    Star Housing Fin

    539017
    Financial Services·20 Aug 2025
    Management Summary

    Star Housing Finance Limited reported a quarter of continued growth in AUM and disbursements, alongside stable asset quality. The company is actively pursuing capital market initiatives, including an NSE listing and authorized capital increase, while navigating a CFO transition. Management expressed optimism for H2 FY26, anticipating a ramp-up in operations and improved financial performance.

    Highlights

    8

    • Asset Under Management (AUM) stood at INR 546.58 crores, marking a 16% YoY growth.

    • Disbursements for Q1 FY26 aggregated to INR 24.41 crores.

    • Total Income for the quarter was INR 21.81 crores, with Net Interest Income at INR 8.25 crores.

    • Profit After Tax (PAT) for Q1 FY26 was INR 1.38 crores, resulting in a Return on Equity (RoE) of 3.83%.

    • Asset quality metrics reported Gross NPA at 1.65% and Net NPA at 1.13%, with Portfolio at Risk (PAR) at 5.18%.

    • The Board recommended a final dividend of INR 0.10 per share and approved a fundraise of up to INR 50 crores via non-convertible debentures.

    • Authorized share capital is set to increase from INR 50 crores to INR 125 crores, subject to shareholder approval.

    • The company applied for direct listing on the NSE platform on July 16, 2025, and initiated co-lending partnerships with Vastu Housing Finance.

    Key financials

    Single quarter

    12 metrics
    1. 01Asset Under Management (AUM)₹546.58 Cr+16%YoY
    2. 02Disbursement₹24.41 Cr
    3. 03Total Income₹21.81 Cr
    4. 04Net Interest Income₹8.25 Cr
    5. 05Profit After Tax (PAT)₹1.38 Cr

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Dividend

    ₹0.1/share (final)

    Liquidity

    Liquidity disclosed

    The liability pipeline, comprising committed limits, undrawn facilities, and partners' proposals, remains robust to support planned asset growth. The company also approved a fundraise through issuance of non-convertible debentures of up to INR 50 crores. The borrowing limit was also approved to be increased from INR 700 crores to INR 1,000 crores.

    Guidance & targets

    7
    CategoryTargetPriority
    Growth
    Disbursement Rate
    Ramp up
    		Medium
    Capital Structure
    Authorized Share Capital
    INR 125 crores
    		High
    Capital Structure
    Equity Raise
    Some kind of equity coming in
    		Medium
    Capital Structure
    Borrowing Limit
    INR 1,000 crores
    		High
    Shareholder Returns
    Dividend Payout
    INR 0.10 paise per share
    		High
    Cost of Funds
    Borrowing Cost
    Slight decrease
    		Medium
    Cost of Funds
    Borrowing Cost Reduction (post rating upgrade)
    25 to 50 basis points
    		Medium

    What to watch in Q2 FY26

    5

    NSE Listing Status

    Optimal time (next quarter)
    CurrentApplication submitted, replied to two query sets
    TargetOnboarding onto NSE platform

    Why it matters

    Successful listing on NSE could enhance liquidity and visibility for the company's shares.

    We applied formally to get direct listing on to the NSE platform of 16th of July 2025. We got two rounds of queries, which we have replied to. And we continue to engage with the NSE team, for further resolution of queries and we see that we get onboarded onto the NSE in the optimal time, subject to all approvals in place.

    Risks & concerns

    4
    RiskSeverity

    Macroeconomic conditions impacting liability pipeline

    The company faced headwinds in the last financial year, particularly in H2, due to macroeconomic conditions affecting the liability pipeline for smaller HFCs and NBFCs. — Management acknowledged

    medium

    Lag effect in reducing borrowing cost

    Despite potential repo rate decreases, there is a lag effect in reducing the company's borrowing cost, and its size/scale means it's often last to benefit. — Management acknowledged

    low

    Impact of RBI circular on asset quality

    A recent RBI circular regarding due dates and EMI receipt dates led to a slight increase in PAR and NPA in Q3 FY25, though numbers are now back on track. — Management acknowledged

    low

    Senior management transitions

    The CFO and other directors have departed, requiring succession planning and new appointments, though the CFO's exit was due to personal exigencies. — Management acknowledged

    medium

    Q&A highlights

    8

    “This is going to ramp up. Yes. This is going to ramp up because of the reason, if you have heard our CEO, Kalpesh Dave's remarks, so there were some issues in terms of debt rates, specifically conditions related to market conditions. Now since those conditions are over, we have raised funds from financial institutions as well as from the regulator, and we are trying to ramp up the rate.”

    Clarifies management's expectation for accelerated loan disbursements after overcoming previous funding challenges.

    asked by Vinil

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance Overview

    Star Housing Finance Limited reported an Asset Under Management (AUM) of INR 546.58 crores as of June 30, 2025, reflecting a 16% year-on-year growth. Disbursements for the quarter stood at INR 24.41 crores. The company recorded a Total Income of INR 21.81 crores and a Net Interest Income of INR 8.25 crores. Profit After Tax (PAT) for Q1 FY26 was INR 1.38 crores, translating to a Return on Equity (RoE) of 3.83%. The decline in PAT compared to Q1 FY25 was attributed to the absence of a one-time📎 income recorded in the previous year.

    02

    Operational Highlights and Growth Strategy

    The company's live customer base expanded to over 5,400 borrowers, served through a network of 37 branches across Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, National Capital Region, and Tamil Nadu. The average incremental loan size remained around INR 10 lakhs in semi-urban markets and INR 8 lakhs in rural centers. Star Housing Finance continues its focus on first-time homeownership for Economically Weaker Sections (EWS) and Low-Income Groups (LIG), with approximately 95% of its portfolio comprising individual housing loans. Strategic efforts are underway to ramp up business in NCR and Tamil Nadu.

    03

    Capital and Funding Initiatives

    Total borrowings for the company reached INR 391.91 crores, resulting in a debt-to-equity ratio of 2.69 times. The Board approved a fundraise of up to INR 50 crores through non-convertible debentures, for which India Ratings affirmed a 'BBB stable' rating. Furthermore, the authorized share capital is set to increase from INR 50 crores to INR 125 crores, pending shareholder approval. The company also secured approval to increase its borrowing limit from INR 700 crores to INR 1,000 crores, indicating a robust liability pipeline and plans for diversified funding.

    04

    Asset Quality and Credit Discipline

    Asset quality metrics for Q1 FY26 showed a Gross NPA of 1.65% and a Net NPA of 1.13%, with Portfolio at Risk (PAR) at 5.18%. Management noted an improvement in asset quality compared to Q4 FY25. A slight increase in PAR and NPA in Q3 FY25 was attributed to an RBI circular regarding EMI due dates and receipt dates, alongside macroeconomic factors. The company emphasizes financial education for customers and employs efficient collection strategies to maintain asset quality.

    05

    Management Transition and Future Outlook

    The company announced the departure of its Chief Financial Officer, Mr. Natesh Narayanan, due to personal family exigencies, though he continues to advise the company. Other director transitions are also underway, with plans to appoint suitable replacements. Star Housing Finance has applied for direct listing on the NSE platform on July 16, 2025, and is actively responding to queries. Management expressed confidence in rebuilding momentum lost in previous quarters and anticipates a strong financial year ahead, particularly leveraging the H2 festival season.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.