SURYODAY - Suryoday Small Finance Bank Limited Share Price

Suryoday Small Finance Bank's management provided an optimistic outlook for FY26, targeting an Asset Under Management (AUM) growth of 30% to 35% and deposit growth surpassing this rate. Key metrics include aiming for a Gross Non-Performing Asset (GNPA) ratio of below 5%, a Net NPA (NNPA) ratio below 3%, and targeted credit costs of around 1%. The bank also projected a secured asset mix increasing to 55%.

Specific numbers shared involved a gross advance of Rs.10,251 crore, with net interest income rising to Rs.1,106 crore, reflecting a year-on-year increase of 15%. Profit after tax decreased to Rs.115 crore, down 46.8% year-on-year. The bank has a Common Equity Tier 1 (CET1) capital ratio of 24.5%, which is significantly above the regulatory requirement of 15%.

Management reported a total deposit base of Rs.10,580 crore, a 36% increase, with a CASA ratio improvement to 20.9%. They emphasized the robust collection efficiency at 98.7% in the current bucket and noted that while GNPA rose to 7.2% from 2.8% year-on-year, they expect credit costs to stabilize by Q3 FY26, supported by the CGFMU program that is anticipated to cover their net NPA.

Management asserted a commitment to sustainable growth and positioning for future profitability, with a return on assets (ROA) forecast of around 1.5% to 1.6% for FY26, translating to a return on equity (ROE) of 11% to 12%. Overall, the management conveyed confidence in navigating current challenges while focusing on diversified, resilient growth in the coming year.

1. Saumil Shah: I wanted to know more on your outlook for FY26. We are about to receive about INR 460 Cr of CGFMU claims against our net NPA of INR 457 Cr. So are we going to receive this claim in FY26?

   Kanishka Chaudhary: Not all of the INR 460 Cr will come in the financial year; about INR 360 Cr is expected to come in the current financial year. Essentially, this means my entire net NPA is covered under the credit guarantee scheme.

2. Saumil Shah: So what would be your outlook for FY26 for AUM growth and NPAs?

   Kanishka Chaudhary: We will target overall book growth of 30% to 35%. On the deposit side, we expect to grow faster. Our secured asset mix will target a range of 55%. For GNPA, we aim for below 5% and NNPA below 3%, with a credit cost of 1%.

3. Sarvesh Gupta: Will you write off these NPAs post-receiving these claims so your net NPA will go down?

   Kanishka Chaudhary: Yes, receiving claim money will reduce the headline GNPA numbers. We will continue collecting based on the CGFMU's terms, which requires us to proportionately return any collected principal recovery.

4. Vijay Shah: What is your total NNPA for IF and coverage status?

   Kanishka Chaudhary: Considering the CGFMU cover, we have about 100% coverage of the NPAs, effectively meaning complete coverage for the eligible number under the scheme.

5. Kanishka Chaudhary: What kind of credit cost should we expect for FY26?

   Kanishka Chaudhary: For FY26, we are guiding around 1% credit cost excluding CGFMU claims. With that included, we anticipate total credit costs in the range of 1.75% to 2%. It's essential to see stabilization trends over the next months.