Ladies and gentlemen, good day, welcome to Satin Creditcare Network Limited Q1 FY24 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. HP Singh, Chairman cum Managing Director of Satin Creditcare Network Limited. Thank you, over to you, sir. Thank you so much. Good evening, everyone. Thank you for coming on a Friday evening to attend our earnings call for Q1 FY24. Amidst the news of flu, conjunctivitis, and other infections, I hope you and your family are safe and keeping healthy. I hope you have already seen our quarterly results and investor presentation. Those who have not seen them yet can do so via our website and stock exchanges. Furthermore, in case you haven't seen our integrated annual report for FY23, it is available on our website now. It will give you a holistic view of our organization and provide a thorough dive into our strong business model and sustainability reporting. The microfinance sector in India had a spectacular journey over the past fiscal year, with tailwinds of robust growth and rural economy owing to increased credit demand on account of revival in economic activities. We, too, witnessed a great turnaround in our business momentum, led by growth in our customer base. In pursuit of our endeavor to grow our outreach to accelerate financial inclusion, sustain business momentum, and efficient underwriting capabilities, we remain relentless and continue to do so with the support of our human capital. Coming to the Q1 performance of Fiscal Year 2024, it makes me happy to share with you all that it marks the best Q1 in terms of growth and profitability in the last five years, reflecting an unprecedented performance. Beginning with the operations for the quarter, we witnessed a strong growth impetus in disbursement, which stood at INR 2,122 crore on a consolidated basis, up by 24% year-on-year, marking the highest ever Q1 disburse ment in the last five years. The pickup in the disbursement led to the AUM growth of 26%, which now stands at INR 9,535 crores. The standalone gross loan portfolio stood at INR 8,367 crore, up by 31% year-on-year. During the quarter, we added around 2.3 lakhs new clients, and our customer base grew by 17% year-on-year. We continue to march ahead with our footprint expansion, with the opening of 27 branches in the quarter on a consolidated basis, which will aid our future growth. Throughout Q1, we kept up the trend of our healthy collection and strong asset quality in lieu of the core strengths of our ground team and diligent assessment methodology. The new portfolio originated from July 2021 onwards, is displaying remarkable performance, which constitutes about 96% of the on-book MFI portfolio, with PAR 1 at 0.9% and PAR 90 at 0.5%, as reported by CRIF High Mark, which is the best in the industry. This is the testimony of our robust underwriting capabilities. The on-book GNPA of the company stood at INR 155 crore, which is 2.49% of the on-book portfolio, down from 4.31% in Q1 FY23. The company has sufficient on-book provisions amounting to INR 103 crore, as on Q1 FY24, which is 1.6% of on-book AUM. Maintaining a strong collection discipline, our collection efficiency continues to remain stable and stood at 99.6% for the period under review. Continuing with our efforts to recover the write-off book, we collected approximately INR 9 crore during the quarter. On the borrowing front, exhibiting the confidence the market has in us and our business acumen, the company raised INR 2,148 crore during Q1 FY24, as compared to INR 1,291 crore during Q1 FY23, up by 66%. Of this, more than 80% is on-book borrowing. The company has successfully completed the preferential allotment of INR 225 crore via the issuance of equity shares and fully convertible warrants after receiving the last tranche of INR 50 crore, which was received in July 2023 from Florintree Ventures LLP. Guided by our strong fundamentals, we have achieved our highest ever profitability in the Q1 of this financial year. Our standalone PAT stood at INR 86 crore, which grew by 43% year-on-year during Q1 FY24. This resulted in ROA of 4.3% and ROE of 17.5%. Our operating efficiency significantly improved in the Q1, with the cost-to-income ratio declining from 71.1% in Q1 FY23 to 48.9% in Q1 FY24. Our operating expense to average AUMs ratio stood at 5.8% in Q1 FY24, as against 7.1% in Q1 FY23, marking a significant reduction of 133 basis points. In evidence to our prudent investment made in technology, the company has been recognized by the esteemed SKOCH Award for excellence in loan management system, where we won in the silver category. In addition to this remarkable accolade, the company has also been ranked 30th amongst the top 100 best companies to work for across all industries by Great Place to Work India, reinforcing our commitment to create an outstanding work culture. I congratulate team for bringing this honor to us. We took the award for home 4th year in a row. We have consistently grown our footprint across the country, harnessed numerous prospects for business, and invested in decisive actions that deliver great shareholder value for multiple stakeholders, guided by a strong regard for customer needs. The exceptional performance in Q1 FY24 in line with our growth aspirations, is attributable to significant customer and portfolio growth, and we are confident to demonstrate good performance in the quarters to come. Let me run you through the financial and operational highlights of our company. On consolidated highlights, our AUM as on 30th June 2023 stood at INR 9,535 crore. We have a customer base of 30.5 lakhs as on 30th June 2023, with presence across 1,310 branches in 96,000 villages and 407 districts of India. We have a total state and UTs count of 24, which makes us a well-diversified pan-India microfinance player. Our top 4 states contribute to 54% of total AUM in Q1 FY24. The states are UP, Bihar, West Bengal and Punjab. Our disbursements for Q1 FY24 stood at INR 2,122 crore, as compared to INR 1,709 crore in Q1 FY23. The total revenue for the quarter stood at INR 464 crore, up by 34% year-on-year. PAT for the quarter stood at INR 88 crore, ROA of 4.3% and ROE of 21%. On the standalone highlights, our AUM as on June 30, 2023 stood at INR 8,367 crore. Our standalone disbursements for the quarter stood at INR 1,980 crore, as compared to INR 1,554 crores in Q1 FY23. Our average ticket size of MFI lending for the quarter stood at INR 43,000. We have a well-diversified customer base of approximately 28 lakh clients, with 77% rural exposure. PAT for the quarter stood at INR 86 crore as compared to INR 60 crore in Q1 FY23. ROA of 4.3% as compared to 3.3% last year. ROE of 17.5% as compared to 14.7% last year. On the GNPA reduced from 4.31% as on June 2022 to 2.49% as on June 2023. In absolute terms, it reduced from INR 217 crore to INR 155 crore. During the quarter, ICRA has revised our rating outlook to A minus stable from A minus negative. Also, we got entity rating done from Infomerics at IVR A- stable. As on June 30, 2023, 96.1% of our districts have less than 1% of portfolio exposure. Our well-thought-out diversification strategy has enabled us to sail through difficult situation and capitalize on our idea of enriching our client life through financing of various products. We have disbursed around INR 45 crore during the reported quarter under the product finance category, which includes loans for bicycles, solar products, home appliances, consumer durables, and water and sanitation. An update on subsidiaries. Satin Housing Finance Limited has now reached an AUM of INR 514 crore, which grew by 50%, 55% year-on-year, having a presence across 4 states with 5,666 customers. SHFL has a 100% retail book. The quality of the portfolio remains intact, with GNP of 0.76% as on June 2023. The company has 22 active lenders, including NHB refinance, CRAR of 46.1% and gearing of 2.5x. The company has a rating of triple B plus stable from Care and Informerics. PAT for Q1 2024 stood at INR 1 crore. Satin Finserve Limited, the company's MSME and BC lending arm, has reached an AUM of INR 654 crore. CRAR of 41% and gearing of 1.3x. PAT for Q1 FY24 stood at INR 1 crore. Credit rating of triple B plus stable from Care and Acuité. Lastly, as we continue down the path of growth, we are prepared for the road of more profitability coupled with cost efficiency. With this, I would like to open the floor for questions. Thank you. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question, may please press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Shah from Crown Capital. Please go ahead. Good evening. Congratulations on the quarter. Thank you. Just three questions from me, and it's just clubbed into one, so I just want your outlook on three things. Are you on track to achieve the guided AUM growth of 25%, and more? Your cost of income has gone down, which is good, so what will be the sustainable number? Your ROA, return on asset, has also dropped. What will be the number you're looking for FY24 on all these three? Thank you. If I can answer you correctly, you know, the guidance for 25% growth plus, I think we are well on track of that. It's the Q1, which is probably the weakest quarter in the entire year. As such, I think, you know, we've done, you know, about 5.5% quarter-on-quarter growth. I think, you know, that is definitely which is within our range, which we will achieve. In terms of our profitability and ROA, my sense is the Q1, again, which is weak, if you are comparing it with the Q4 of FY23, which was 4.9%, I think, you know, we've not dropped too significantly down. I think, you know, the PAT standalone was about INR 94 crore. This time, standalone PAT is about INR 86 crore. My sense is, having seen a weak quarter in comparison to the last quarter, where the disbursement was also close to about INR 2,600 crores, we've done about INR 2,100 crores. My sense is, as we go further and further quarters, I think, you know, that guidance of about 3.5%, I think we have, we will probably, probably overachieve that. That's point number two. The third question, sorry, is if I missed out, I don't know what was your third thing, you know? It was on the return, return on assets, sir. ROA. ROA. ROA, I'm giving you the answer. Oh, that was ROA. Okay. No problem. Yeah. actually, I also asked on cost-to-income. That was my second one, and then I went- Cost to income, my sense is it will remain stable, in terms of our NIMs as well as, you know, the way, we are looking at that. I think, you know, we are in the range of about 48%. It was 45% in the last quarter. I think it'll remain range bound across over there. I think that is where we stand in terms of our cost to income also. Okay. Cost to income and return on assets, you feel this number will be comfortable with- Yeah. for the full year. This, all of this was for the full year, right? Yeah, exactly. Correct. Correct. Okay. All the best. Thank you so much. Thank you. Thank you. The next question is from the line of Ronak Singwi, an individual investor. Please go ahead. Good evening, sir. Thank you, for giving the opportunity. First of all, congratulations for, I guess, now not in the new normal. Ronak, sir, your audio is breaking up. Can you use the handset mode while speaking and not the speaker phone? No, I'm, I'm on my hand phone. Let me just try again. Sure, sir. Yeah, Ronak, please go ahead. Now we can hear you. Yes, Ronak, please go ahead. Yeah. Okay. Congratulations on a fantastic set of numbers. I have a few questions more for futuristic, and a few questions on the current operations. One is, any status on the Assam historical collection, if we were to receive something from the government, right? Any update on that would be helpful. Any impact on the floods in the northern, northern part of India, because we have seen unprecedented floods over the last 4 weeks, and this would hit this quarter. Any impact of that from a disbursement or a collection perspective? Also with Florintree completing their investment, and a lot of the historical investors were basically exited because of their fund life ending. Is there any diversity, diversity with Florintree also getting their nominee on the board? Any, any plans there? Any future equity or raising plans later this year? I, I recall there was an announcement a few weeks back that there was a potential transaction, but, then it didn't go through. I guess the four questions on this. Thank you. Okay. Let me answer one by one. You know, in terms of Assam, I think, you know, we've shared our last, last bit of data with the state government, in terms of category three, you know, the amount of money which was supposed to come to us. We are very hopeful that once this has been shared now, I think we are waiting now the first tranche to come in. You know, my sense is it could be coming in any point of time. That's a big positive, which is happening, you know. We still wait for till the till the time the actual money doesn't come in. All indications, you know, point towards, you know, definitely, yes, that money, the first tranche will definitely come in, you know. In terms of our portfolio, which is just to give you an additional thing, the newer portfolio, which we built, post all this crisis in Assam, is one of the best performing in the entire industry for, as well as the entire country for us, you know. Our GNP over there, you won't believe it, is 0.02%. That is where Assam holds, you know. On the flood spot in northern India, yes, there has been a slight disruption in a couple of districts in Punjab and about a, about a district in Haryana. It has not affected the entire state. It is just, I think it is reported total about three states which have been affected. Sorry, three, three districts which have been affected. What it signifies is that there will be a slight disruption for about a month or so, in these three districts, you know. Having seen floods across in the last so many years as such, you know, it's just a temporary blip, you know, there is nothing which will probably affect our GNPA levels, our portfolio quality, as well as our asset quality. Be rest assured on that. This money, whatever little is disrupted, and if I give you maybe just a hypothetical figure, out of a total set of 5 lakh customer base in Punjab, I think about 1,000 would have been affected, you know. That is what the numbers are, you know. I think, you know, you can probably be reassured on that, you know, which is there, you know. That's the second point. The third one, which you said, in terms of our Florintree. Diversified. diversified shareholding. Yes, definitely with Florintree coming in, we will get a diversified, marquee shareholder who probably has had multiple dreams run across over there. I hope his, his, charm works on us also. Basically, I don't know whether the numbers will work or, or what will work, but definitely, yes, I think we are on a very healthy upside on that. In terms of the exits of a couple of our investors, these investors have been invested for about 8 years to 9 years as such. Their funds were coming to a close, so it's a natural phase for them to exit out of there, and they have exited with a profitable, you know, exit, which also bodes very well for the, I think, for the entire investor community across. Their funds were coming to a close. They had no option but to exit, you know, so that is what has happened. Nothing which is probably a cause where any thought can be raised across over there. In terms of the equity rates, I can only give you an assurance. We've raised equity whenever we required it. You know, if you look at our entire history of fundraising, we have raised equity whenever we wanted to or whenever the organization required it. This will happen also in the future, which will come in. The moment we feel that we significantly require equity for funding our profitable growth or funding our growth, you know, moving ahead, you know, we'll be able to raise that. You know, so that is going to happen across over there. In terms of what happened in the previous, yes, there are conversations which always go on with, with investors across the board. Sometimes you are able to, able to achieve what you really want to look at through. You know, we have become a slightly, a little, significantly looking at the way we want to look at the, a fresh set of investors to probably come in. At this stage, we are at an inflection point of growing and, moving in the next stage of our life. I think, you know, we keep that in mind, once choosing an investor. I think that probably, you know, I think is my comments for all, all the questions, which you asked, you know. I hope. Thank you. Thank you. Just there was one, sort of question also, I guess, in that, was around, will Florintree have a nominee on the board? because they being, generally the norm, greater than 10%, the shareholders would want, a nominee on the board. Also considering the pedigree of the investor, what is, what is your view and the company's view to get, a Florintree representative on the board? There's no discussion on this, you know, to be very honest. I think, you know, for us, you know, it's not necessary for any investor to probably be there on the board to give any value-added, you know, services or any kind of, you know, value-add, you know, thoughts to us. You know, I think, you know, we always welcome all these kind of things from any investor who's there with us, you know? That is what probably answers it. I think it's more what you get from the investor rather than, you know, probably just having someone on the board. You know, that's what our thought is, and that is how we deal with Florintree also. We've got a good marquee investor, and we definitely look forward towards his contribution in helping the company grow to the next stage. Thank you. Thank you very much, sir. Thank you. All the best. Thank you. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Varun, an individual investor. Please go ahead. Good evening. Congratulations on a good set of numbers. I have a few questions. First one is, can you elaborate on the reason for the decline in yield quarter-on-quarter? Second one is, I see that the on-book AUM has increased 10% quarter-on-quarter, but the direct assignment, assignments have decreased. The ratio of direct assignments to total AUM has come down significantly. How do you see this trending going forward? The third one is, what comprises of this negative INR 9 crore of comprehensive income on the standalone company and INR 2 crore on the housing finance company? The last one is, the NIMs in the housing finance subsidiary have declined significantly. What could be the reason behind that, and how do you expect it to trend going forward? If I can break this, you know, I can probably give you on the on-book, you know, DA, this thing. I think DA assignment, you know, which happens is technically an answer to how the funding is available. We've always maintained that we would like to keep the assignment part technically in the range of about 20%-30%. You know, this is where we stand right now. It all depends on quarter to quarter also. Technically, what happens in terms of the funding rate, the assignment works in terms of banks and everything, you know, during the last quarter, which is far more significant as compared to the Q1 as such. I think, you know, we build up our kitty, of course, over there, and depends on the thing. There is nothing which probably, you know, probably will do that. With this decline, I think the on-book, you know, increases across over. I think the way to look at the yield is you should look at the entire FY23 and then compare the yield of this quarter, Varun, because Q4 had also significant high DA and hence a little bit of DA income, so the yield was bit higher on that account. Got it. Got it. DA income gets normalized when you look at the year in totality. That's where you will see a positive uptick. Yeah. Got it. Just to add, you know, we have done a total direct assignment transaction of almost INR 800 crore in the Q4, while in this quarter it is close to about INR 400 crore. That explains the variance between yield in Q4 and Q1. Got it. Got it. There was one question on. CA. So, so- Yeah, the comprehensive income. I think, you know, that is when we are doing the fair valuation of the security receipt of the ARC transaction. We have already made the provision. Some part of the provision based on the security receipt valuation has to be routed to other comprehensive income. That is the entry which is there in the other comprehensive income. Got it. That INR 9 crores and INR 2 crores seem like a significant amount, no? You know, that was already provided from, from the P&L account. Based on the securities, it is receipt valuation, it has to be routed through the other comprehensive income as per our accounting standard, accounting policy. So we have done that. Got it. Got it. What about the NIMs in the housing finance company? They seem to be have fallen significantly as well. You know, the leverage is slightly increasing. To that extent, you know, the, the NIM% is going down. As far as the lending rate and cost of funding margins are concerned, they are intact. As, so in line with our cost of funding, we are changing our lending rate. Got it. Sorry, one last question. If you look at your income statement, there is this bracket called other expenses, again, those other expenses increase 50% quarter-on-quarter. Is there any one-off over there? What actually forms a part of this other expenses? You are talking about March to June? Yes, yes, I'm talking about March to June. From INR 22.51 crore, it has gone to about INR 27.74 crore. You know, the volumes are increasing, and to that extent, you know, there's increase. If you see the overall OpEx, it has come down, and overall OpEx is around 5.8% of the. I mean, absolute number, you know, as the operations will increase, we have opened some new branches, et cetera. Sorry to interrupt you, but it's gone from INR 23 crores to INR 34 crores, and the delta seems again, a little bit large. It's a 50% increase, quarter-on-quarter. I'm referring to slide 31 of the presentation. We're talking about consolidated numbers. Standalone numbers. Standalone numbers, slide 31, other expenses. One time Forex 1. There is a, you know, Forex impact, foreign exchange accounting impact on the things. Corresponding about INR 5 odd crore is part of the expenses as well as part of the top line, which is a contra entry on hedging of ECB transaction, et cetera. If you are seeing the pure operating cost, 5.8% is a number as against broadly 6%, 6.14% in the previous quarter. Got it. Got it. Thank you, and good luck for the next quarter. Thank you. Thank Thank you so much. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Aditi Singh, head of strategy, for closing comments. Thanks, Suzanne, and thank you everyone for coming on this call. We have tried to explain everything in the investor presentation and through this call. Still we are open to get on a call or over email, exchange or discuss if you have any more queries. You can reach out to me or my colleague, Shweta Bansal, in Investor Relations. We will be happy to explain or clarify whatever you want to discuss with us. Thank you. Have a great evening and great weekend. Stay safe. Thank you. Thank you. Thank you, everyone. Thank you, members of the management team. Ladies and gentlemen, on behalf of Satin Creditcare Network Limited, that concludes this conference call. We thank you for joining us. You may now disconnect your lines. Thank you.