CANFINHOME - Can Fin Homes Ltd. Share Price

Major Questions and Detailed Answers from the Q&A Section:

1. Question: "So are we seeing other peers also in the landscape following a similar trajectory on the lending rate side? Or are we early in this because we are seeing some prepayment-related issues?"

   Answer: We have passed on the benefits based on our borrowing costs, and it's unclear how much peers have done the same. We shifted our bank borrowings to repo-linked rates, which helped us reflect the benefits quickly. While there is some prepayment pressure, we also observe that despite passing on 50 basis points, our spread has improved from 2.55% to 2.89%. We aim to maintain spreads while actively managing pricing strategy.

2. Question: "What kind of rate that you are seeing being offered by the NHB borrowing?"

   Answer: Our blended rate for NHB refinance is 6.3%. We opted not to draw the full INR1,500 crores as we have sufficient funds available and to avoid higher costs later. We believe by retaining INR1,000 crores for Q4, it will better suit our upcoming requirements without additional market pressure.

3. Question: "Are we equipped to see a higher growth or closer to your longer-term average growth for FY 27-28?"

   Answer: We expect an AUM growth of about 11-12% this year but anticipate higher growth next year. The plan is to disburse around INR13,500 crores, factoring in expected prepayments. Thus, for the next fiscal year, we aim for a return to around 15% growth, adjusted for market conditions.

4. Question: "What is your plan on branch expansion for the next two years?"

   Answer: We plan to open 25 new branches each year, focusing on markets with potential. Most new branches will be in North and West India, while we may open a few in recovering areas like Karnataka. Overall, we aim for about 300 branches by FY '28.

5. Question: "What steps are we taking to communicate with our borrowers about prepayments and rate cuts?"

   Answer: We have proactively communicated changes, offering a 60-day timeframe for borrowers to switch to quarterly resets. This new process aims to simplify client interactions and increase awareness regarding rate changes that benefit them, potentially reducing prepayments.

6. Question: "How are we planning to diversify the sourcing mix instead of relying on DSAs?"

   Answer: We're enhancing the sales team, growing from 90 to 115 this year and expanding to 250 by FY '28. We also plan to implement digital onboarding to attract new customers and reduce dependency on traditional DSAs while improving our sourcing diversity.

7. Question: "Could you provide guidance on your credit cost for FY '27 and '28?"

   Answer: We anticipate a credit cost of about 15 basis points. While this year we've done better, we expect a normalization owing to market conditions. However, we are confident that adequate measures will help maintain stability across portfolios.

8. Question: "How much do you attribute the improvement in delinquencies to the economy and macros?"

   Answer: Our improved delinquency stats are largely due to our focus on the salaried segment, which has lower GNPA levels. While macroeconomic conditions do play a role, our customer mix and careful strategy in lending practices significantly affect our performance.

9. Question: "What kind of NPAs do you expect with an increased share in non-housing loans?"

   Answer: While the NPA rates for non-housing loans typically trend higher, we maintain our overall target below 1%. We are confident that our risk assessment and policies will manage the NPA levels effectively as we transition to a more balanced portfolio mix.

10. Question: "Can you share more about your IT transformation's impact on operations?"

Answer: We're completing our IT transformation, expected to result in minimal downtime"”around 3-4 days. Once in place, we project a significant reduction in turnaround times and improved operational efficiency, aiming for about a 20% productivity boost in branch operations.