Sammaan Capital Q1 FY27 earnings call

Sammaan Capital Limited reported a strong Q1 FY27 with Assets Under Management (AUM) growing to INR56,239 crores and disbursements reaching approximately INR3,875 crores. The company achieved a Profit After Tax (PAT) of INR243 crores for the quarter. Asset quality saw significant improvement, with gross recoveries of INR424 crores and net recoveries (net of provisions) of INR240 crores, leading to a Net NPA of 0.15%.

The company successfully upgraded its domestic credit rating from AA to AA+ and international rating from B+ to BB-. This has led to a decline in the cost of funds from 10.5% to 10% during the quarter, with a target to reach 9.6% by September and 9.3% by year-end. Management anticipates further reduction to 7-8% over the next 2-3 years, resulting in annualized savings of INR450 crores on a INR50,000 crore borrowing program.

Sammaan Capital is diversifying its product portfolio beyond its monoline mortgage business, with plans to expand from 5 to 10-15 products. This year, 75% of disbursements will be mortgage-backed, with 25% from new products like personal loans and loans against securities. The company aims for INR10,000 crores in disbursements for H1, INR20,000 crores in H2, totaling INR30,000 crores for FY27, and INR40,000-50,000 crores for FY28.

A significant focus is on building a digital-first strategy, with 60% of 53 identified use cases for seamless credit decisions and risk management to be implemented within FY27. The goal is to service all individual and MSME customers via an app, ensuring end-to-end digital delivery for products. This digital push, combined with an asset-light model and securitization strategy (30% of originations), is expected to drive efficiency and reduce the cost-to-income ratio from 50% (FY27 target) to 30-35% by FY29.

The company highlighted the tangible benefits of IHC's ownership, including significant cost savings on borrowings and technology procurement (30-50%). IHC's broader vision for Sammaan Capital is to leverage it as a platform for growth in the Indian financial ecosystem, exploring opportunities in fintech and private equity. Management expressed high confidence in achieving ambitious 5-year targets, including an ROE of 18.7%, ROA of 8.1%, and NIM of 8%.

The branch network is projected to grow from approximately 240 branches at the end of H1 to 270 branches by year-end, with a long-term target of 800 branches by the end of next year. This expansion supports the implementation of micro LAP, rural home loans, and eventually gold loans. The company is also actively hiring senior and mid-level personnel, as well as ground-level staff, to support its growth and manage increasing complexity.