Detailed Narrative
Strong Financial Performance in FY25
SRG Housing Finance achieved an AUM of INR 759 crores in FY25, surpassing its target of INR 750 crores, representing a 26% growth from INR 601 crores last year. Profit After Tax (PAT) increased by 14% to INR 24 crores from INR 21 crores in the previous year, while total income grew 22% to INR 155 crores. The company's net worth significantly rose by 66% to INR 264 crores from INR 159 crores, reflecting robust financial health and capital base.
Improved Asset Quality and Prudent Credit Management
The company demonstrated a notable improvement in asset quality, with Gross NPA reducing to 1.84% in FY25 from 2.29% last year, and Net NPA decreasing to 0.61% from 0.69%. Management clarified that the credit cost was 1.82% in March, lower than the previous year's 2.24%, and the Stage 2 book stood at a healthy 0.46%. This indicates effective credit management and no significant stress in its 100% secured loan portfolio, which primarily consists of housing loans (73%) and LAP (27%).
Strategic Branch Expansion and Geographical Diversification
SRG Housing expanded its branch network to 90 in FY25 from 67 in the previous year, with a target of 100 branches. The company has successfully diversified its operations beyond Rajasthan (29% of Q4 disbursements) into Gujarat (47%), Maharashtra (15%), Andhra Pradesh (2-2.25%), and Karnataka (2.72%), with plans to enter Tamil Nadu. This expansion strategy focuses on less competitive semi-urban and rural areas, enabling comfortable business growth and reducing geographical concentration risk.
Optimistic Future Growth and Profitability Outlook
Management provided an optimistic outlook, targeting an AUM of INR 1,000-1,100 crores for FY26 and INR 1,500 crores for FY27. Despite a current ROA of 3.17% (down from 3.56% due to increased equity), they expect ROA to cross 3.5% next year and eventually 4%. Operational efficiencies from completed expansion, increased ticket sizes, and stable fixed costs are anticipated to drive PAT growth higher than AUM growth in the coming two years.
Funding and Liquidity Management
In FY25, the company successfully raised INR 274 crores, including INR 80 crores in equity. Outstanding borrowings stood at INR 584 crores, with a diversified mix of 46% from banks, 48% from FIs, and 6% from NHB. The company maintains strong liquidity with INR 55 crores in liquid funds and a comfortable ALM position, while prudently avoiding high-cost, short-term, or bullet payment NCDs to manage its cost of funds effectively.
Experienced Management and Governance
SRG Housing has built a strong Pan-India team with experienced professionals across various functions, including credit (15 years experience), national recovery, technology, risk control, and HR (18 years experience, IIM alumni). The board also comprises experienced bankers, CAs, and compliance secretaries, ensuring robust governance and expertise to support the company's ambitious growth trajectory and navigate industry challenges🌐.