Aptus continued with their growth trend (28% loan book growth, 23% in disbursement, 26% in interest income and 20% in PAT). They were facing some headwinds in Tamil Nadu due to higher attrition, where growth rates came down to 13% (vs 35%+ in other states). This problem seems to be normalizing now and they plan to maintain 25% loan book growth and add 30-35 branches annually (current branch count is 250). Concall notes below.
FY24Q2
- They increased SME loan rates by 50 bps in September 2023 and NIM growth trajectory will continue in next few quarters
- There was some attrition in Tamil Nadu at branch manager level which has affected growth (13% in TN vs 35%+ in other states). This problem has reduced recently and they are confident of reviving growth rates to 25% in FY24
- Growth strategy is always to go deep into a state and when going to a new state, start with places at border of the state nearby where they already have operations, and expand in a contiguous manner
- Always recruit local people for expansion
- Borrowing cost of NBFC is 25-50 bps higher than HFC (current borrowing cost is 8.25-8.3% for HFC)
- Will maintain spread of 8.5-9%
- Intend to add 30-35 branches annually
- Total pre-closures: 8% (5.5% from customer funds + 2.5% BT-out). According to my calculations, repayment/loanbook is 16% annually in normal times (e.g. Canfin) which translates to 4% quarterly. It becomes a problem when this increases to 20%. For Aptus, current quarterly number is around 4% which is fine
Disclosure: Invested (position size here, no transactions in last-30 days)