Detailed Narrative
Strategic Consolidation and Capital Infusion
Sammaan Capital announced the proposed merger of its subsidiary, Sammaan Finserve, into Sammaan Capital, aiming to consolidate lending and distribution for a full suite of mortgage-backed loans. This move is a logical step following the proposed preferential allotment to IHC. The company is actively engaged with regulators for approvals for this capital infusion, which is expected to finalize soon, with the process having entered its final stages.
Robust Financial Performance in Q3 FY26
The company reported a strong financial quarter, with net worth increasing by approximately INR6,000 crores to INR22,423 crores. AUM reached INR44,000 crores. Profit after tax for the quarter was INR314 crores, up from INR302 crores. For the nine months, PAT stood at INR957 crores, a significant turnaround from a consolidated loss of INR2,132 crores in the prior year.
Stable Asset Quality and Product Evolution
Asset quality remained stable, with Gross NPA at 1.2% (down from 1.3% in FY25) and Net NPA at 0.7% (down from 0.8%). The product suite now includes four offerings: home loans for prime (INR30 lakh) and affordable (INR15 lakh) segments, and LAP loans for prime (INR75 lakh) and affordable (INR25 lakh) segments. The company continues to focus on its asset-light strategy, with 90 days past due on sold pools at 0.54%.
Co-lending and Technology-driven Operations
Sammaan Capital is actively operationalizing new co-lending arrangements, which are now broader than just priority sector loans, covering all loan types and financial entities. While initial business volumes are expected to be slow for the first two quarters, they are projected to return to original levels by May-June of next year. The company emphasizes technology, with digital lead onboarding, KYC, banking analysis, underwriting, and disbursal processes in place, aiming for 15-18% opex cost savings.
Update on Public Interest Litigation (PIL)
The long-running PIL, initially filed in 2019, remains sub judice in the Supreme Court. Despite previous dismissals by the Delhi High Court in February 2024 and regulatory affidavits confirming no major violations and full loan repayments, the matter continues. Management asserts no financial loss to Sammaan Capital, having earned INR3,017 crores in interest income from the loans in question, and is confident in its legal position.
Future Capital Structure and Growth Strategy
Post capital infusion and as cost of funds reduce, the company targets a long-term gearing ratio of 4x to 4.5x by 2030, up from the current 2.2x. Management also anticipates starting dividend payouts with a 30-40% payout ratio over the longer term. The company plans to expand its branch network by adding about 10 branches per quarter and reaching 400-500 cities within the next two financial years.
Cost of Funds and Recovery Outlook
The current incremental cost of borrowing is around 9%, but management expects it to drop below 8% quickly after the investment. The overall stock cost of funds is projected to decrease by about 270 basis points by March 2027. The company also expects to recover approximately INR4,500 crores from write-offs over the next three years, continuing to use provisions to facilitate these recoveries, with net collections of about INR5,000 crores this year.