Indostar Q4 conference call highlights:
Company to focus on used commercial vehicles and HFC. More focus will be on cv where yields are better at 18% and 90 to 95 % disbursements will be done on the used cv front.
Processes and technology are in place. Will grow from a low base and maintain better than Industry growth
The reversal was done for unvested ESOPS that were charged to P&L last year
Collection against the pool assigned to Arc has been substantial
For Hfc, discussions and due diligence are ongoing with JM Financial.
To avoid errors we have strengthened control, reviewed policies, and upgraded our technology system right from loan origination, credit appraisal disbursal, and as well as collection processes. New controls are in place and new underwriting is taking place and will help to grow the loan book.
The cost of funds in q4 was at 10.5% and is at its peak. Going forward cost of funds will come down gradually.
Will disburse around 4000 crs for cv and 1100 crs for hfc this year.
Expect opex at 4% of aum and credit cost will be at 1.5 to 2% (without any reversals)
ROA should be at 1.5% to 2% for FY24 and FY25 ROA to be at 2 to 2.5%
To improve ROA, Will focus on high-yielding CVs. Will look to reduce opex and maintain branch profitability.
Loan book guidance for FY 25 - Expect to have a book of 9000 crores for cv and 4000 crs for HFC. The rest will be SMEs and Corporate as they will see degrowth.
The market of used CVs is at 1.7 lakh crs 40% organized and 60% unorganized. Will tap unorganized, unorganized play at a higher rate. Our rates are much lower with better services.
Customers are retail and first-time users. Typically the Loan tenure is at 3 to 3.5 years for CVs.
Hfc to focus on retail in tier 3 and tier 4 cities, that are first-time home builders. Avg ticket size is at 8.9 lakhs. Strong foundation in the South. 5.5% to 6% spread.
Please add if I have missed anything.
Disclosure same as above.