Star Housing Fin — Q4 FY25 earnings call

Call held 8 May 2025

Management summary

Star Housing Finance Limited reported a strong FY25, marked by significant growth in AUM, total income, and PAT, despite a challenging liquidity environment. The company maintained focus on asset quality, with GNPA at 1.84%, and successfully diversified its funding sources. Strategic initiatives include deeper penetration in existing geographies, continued investment in technology, and an aspiration for NSE listing in the current financial year.

Highlights

  • Asset Under Management (AUM) grew 21.98% YoY to INR 520.7 crores.

  • Total Income increased 54% YoY to INR 94.96 crores for FY25.

  • Net Interest Income (NII) for FY25 was INR 32.94 crores.

  • Profit After Tax (PAT) for FY25 rose 25% YoY to INR 11.11 crores.

  • Gross NPA stood at 1.84% and Net NPA at 1.40% as of March 31, 2025.

  • Secured INR 210 crores in incremental credit sanctions and completed a INR 55.83 crores direct assignment transaction.

  • Leverage stood at 2.81x with total borrowings of INR 403.81 crores.

Key financials

2 periods

Headline

  • Asset Under Management (AUM)
    ₹520.7 Cr
    YoY +22%
  • Gross NPA
    1.8%
  • Net NPA
    1.4%
  • Total Borrowings
    ₹403.81 Cr
  • Leverage
    2.81×
  • Direct Assignment Transaction
    ₹55.83 Cr
  • Portfolio at Risk
    5%

FY25

  • Total Income
    ₹94.96 Cr
    YoY +54%
  • Net Interest Income (NII)
    ₹32.94 Cr
  • Profit After Tax (PAT)
    ₹11.11 Cr
    YoY +25%
  • Disbursement
    ₹148.6 Cr

What they filed

Q3 FY26: revenue up 7.4%, net profit down 76.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY24Q1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26
Revenue16 19 22 24 28 +70%22 +15%25 +15%26 +7%
Net profit3 3 3 2 3 +9%1 −54%2 −42%0 −76%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Undrawn ₹40 Cr INR 40 crores sanction from NHB still has not been disbursed and is available for use. Direct assignment transaction provides a good clear runway for the next 3 to 5 months of clear disbursement runway. Cash position is good enough to take care of disbursements.
    For the financial year '24-'25, we secured a total incremental sanction of INR 210 crores from various banks, NHB and financial institutions, of which the INR 40 crores sanction from NHB still has not been disbursed and it's available for use in the current financial year. (Natesh Narayanan) ... direct assignment gives us a good clear runway for the next 3 to 5 months of clear disbursement runway. So ALM is robust. It's fairly enough in a very good position to take care of our liabilities. Cash position as in our liquidity position is good enough to take care of our disbursements as well. (Natesh Narayanan)

Guidance & targets

Volume

  • Loan Book Volume · next 3 to 4 years · Low confidence INR 2,500 crores
    But our vision, if you ask me is to have a INR 2,500 crores of loan book, and I'm not giving any guidance over here, but that's what we have resolved in our earlier calls also that in next 3 to 4 years, we should look forward to become a midsized housing finance company with a reasonable presence across major centers in India.

    — Kalpesh Dave

Other

  • NSE Listing Other · current financial year, somewhere maybe in the latter half of the year (FY26) · Medium confidence Transition to NSE
    definitely during the current financial year, somewhere maybe in the latter half of the year, we would explore, we would see if we indeed do qualify to get transition to the NSE.

    — Kalpesh Dave

Asset Quality

  • Portfolio Risk Numbers Asset Quality · upcoming quarter · Medium confidence better portfolio risk numbers
    It is slightly higher as compared to last quarter, but that increase is on account of, as detailed by Kalpesh Dave, that is the case of one certain pocket wherein we have seen some sort of issues. Those issues have been captured. And you will see better portfolio risk numbers in the upcoming quarter.

    — Anoop Saxena

Geographic Expansion

  • Deeper presence Geographic Expansion · future · Medium confidence go deeper in the geographies of National Capital Region, again, which is a Uttar Pradesh, Tamil Nadu and ofcourse Maharashtra.
    In term of future expanding in terms of geographies, we are planning to go deeper in the geographies of National Capital Region, again, which is a Uttar Pradesh, Tamil Nadu and ofcourse Maharashtra.

    — Anoop Saxena

Technology

  • Investment in technology platform Technology · future · Medium confidence invest more
    furthermore subject to approval from Board and other stakeholders, we are further keen to invest more in the technology platform.

    — Anoop Saxena

What to watch in Q1 FY26

Asset Quality (GNPA/NNPA)

upcoming quarter
Current GNPA 1.84%, NNPA 1.40% as of March 31, 2025
Target better portfolio risk numbers

Why it matters

Management expects improvement, crucial to verify if the one-off incidents and legacy book impact are truly resolved, impacting overall asset quality and provisioning.

It is slightly higher as compared to last quarter, but that increase is on account of, as detailed by Kalpesh Dave, that is the case of one certain pocket wherein we have seen some sort of issues. Those issues have been captured. And you will see better portfolio risk numbers in the upcoming quarter.

Risks & concerns

  • Liquidity Tightening

    medium

    Tightening liquidity in Q2-Q4 FY25 affected disbursements, particularly for smaller/mid-sized HFCs, but new funding lines and direct assignment have provided runway.

    Management acknowledged

  • Elevated Gross NPA

    medium

    GNPA increased due to numerator/denominator effect from DA transaction and seasoning of legacy portfolio (70% of gross NPA), with some one-off incidents in specific regions (Vidharba, Udaipur) that have been addressed.

    Management acknowledged

Q&A highlights

8 direct
Major operational geographies and future expansion plans Direct
majorly, we are present in the geographies of Maharashtra... In term of future expanding in terms of geographies, we are planning to go deeper in the geographies of National Capital Region, again, which is a Uttar Pradesh, Tamil Nadu and ofcourse Maharashtra.

Provides clarity on current market presence and future growth strategy, indicating where the company will focus its expansion efforts.

Asked by Ashish Kumar

Details and benefits of the direct assignment transaction Direct
this is our first direct assignment transaction... it improves our ALM in a very big way... validates our credit underwriting processes... gives us enough firepower to do disbursements for the coming quarter.

Highlights a new funding/liquidity strategy and its benefits for the company's balance sheet, ALM, and future disbursement capacity.

Asked by Ashish Kumar

Expected timeline and strategic objective for NSE listing Direct
definitely during the current financial year, somewhere maybe in the latter half of the year, we would explore... we do feel that one of the impending criteria, which is INR 75 crores net worth for 3 financial years... we have attained.

Confirms the company's intention to list on NSE, provides a timeline, and indicates a key financial criterion has been met, signaling potential for enhanced capital access.

Asked by Ketan Kataria

Average Loan-to-Value (LTV) at portfolio level and digitalization efforts Direct
at portfolio level, we are operating at 55% LTV, which typically means that against INR 550 crores AUM, entire AUM of INR 550 crores is secured by way of approximately INR 1,000 crores of assets covered as a security... Star Housing Finance Limited is 100% at digital mode.

Provides insight into the company's conservative lending practices (low LTV, high security cover) and its advanced digital adoption, which can improve efficiency and risk management.

Asked by Vishal Jaiswal

Reasons for lower disbursements and rising GNPA in the current financial year Direct
Disbursement lower, yes, definitely, the disbursement has been lower in the current financial year. And that comes on the heels of liquidity tightening... GNPA number increase, I would tell you that's a numerator/denominator effect also that has come into place given that we have done -- executed a INR 55 crores DA transaction that basically reduces our overall base and hence, that number basically looks increased.

Addresses critical concerns about operational performance (disbursements) and asset quality (GNPA), attributing them to external liquidity conditions and the impact of a specific transaction.

Asked by Vikas Kasturi

Pattern of GNPA and contribution from the legacy book Direct
approximately 70% of our total gross NPA numbers are coming out of legacy book... 60% of that book has been run down partially paid or fully paid... in approximately 2 to 4 quarters, we will be able to completely close that book.

Clarifies that the majority of NPAs stem from inherited legacy assets, providing a clearer picture of the asset quality of the current book and a timeline for resolving the legacy issues.

Asked by Vikas Kasturi

Portfolio at risk number and ALM profile for the year ahead Direct
our portfolio at risk is at sub 5%... all individual buckets are meeting their respective -- there are no negative gaps till 3 years... ALM is robust. It's fairly enough in a very good position to take care of our liabilities.

Reassures investors about the company's risk management and liquidity position, indicating a stable balance sheet and adequate funding for future operations.

Asked by Prathamesh

Intent for inorganic growth (buyout or M&A) Direct
we do not have that kind of intent as of now... we are investing in capacity creation, be it physical infrastructure, manpower or technology... focused on developing that kind of operational leverage... rather than having an inorganic kind of a thing.

Clearly states the company's strategy is organic growth and capacity building, ruling out M&A in the near term and providing clarity on capital allocation priorities.

Asked by Anil Rajwan

2 min read 5 chapters

Detailed narrative

Strong Financial Performance in FY25

Star Housing Finance Limited reported robust financial growth for FY25, with Asset Under Management (AUM) increasing by 21.98% year-on-year to INR 520.7 crores as of March 31, 2025. Total Income saw a significant 54% year-on-year rise to INR 94.96 crores, while Profit After Tax (PAT) grew by 25% to INR 11.11 crores. Net Interest Income (NII) also improved, reaching INR 32.94 crores for the fiscal year, demonstrating strong operational performance.

Asset Quality and Legacy Book Management

As of March 31, 2025, the company's Gross NPA stood at 1.84% and Net NPA at 1.40%. Management clarified that approximately 70% of the gross NPA originated from the legacy book inherited five years ago, with 60% of this book already run down. They anticipate completely resolving the legacy book within the next 2 to 4 quarters, expecting "better portfolio risk numbers in the upcoming quarter" for the new book, which has better underwriting standards.

Diversified Funding and Liquidity Management

The company successfully secured INR 210 crores in incremental credit sanctions from various banks and financial institutions during FY25. Total borrowings as of March 31, 2025, were INR 403.81 crores, resulting in a leverage of 2.81x. A significant milestone was the completion of their first direct assignment transaction worth INR 55.83 crores, which provides a "good clear runway for the next 3 to 5 months of clear disbursement runway" and validates credit underwriting processes.

Strategic Focus on Organic Growth and Digitalization

Star Housing Finance is committed to organic growth, aiming for an aspirational loan book of INR 2,500 crores within the next 3 to 4 years. The company has invested approximately 1% of its gross revenue in enhancing its software and core loan origination/management systems, achieving 100% digital operations. Future plans include deeper penetration in existing geographies like Maharashtra, Rajasthan, Madhya Pradesh, Gujarat, NCR, and Tamil Nadu, alongside further technology investments to scale operations.

Aspiration for NSE Listing

The company expressed its intention to transition its listing to the National Stock Exchange (NSE) in the current financial year (FY26), potentially in the latter half. Management confirmed that the key criterion of INR 75 crores net worth for three financial years has been met. This move is seen as a natural progression to enhance capital market activity, improve liquidity, and support future growth initiatives.

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