Analysis of Sammaan Capital Q3 FY25 Conference Call & Outlook for Next 3 Years
1. Capital Position & Fundraising
- Successfully raised $150 million (~₹1,300 crore) via QIP, adding marquee institutional investors.
- In the last 12 months, raised ₹5,000 crore in equity capital, improving capital ratios significantly.
- Gearing ratio is now at 2.2x, down from 9x in FY19, demonstrating strong balance sheet consolidation.
2. Asset Growth & AUM Composition
- Growth AUM at ₹35,000 crore (66% of total AUM), up significantly.
- Legacy AUM reduced to ₹14,300 crore in the last 12 months; target for further reduction remains intact.
- Projected AUM for FY27:
- Sammaan Capital Standalone: ₹70,000 crore
- Consolidated AUM (including Sammaan FinServ): ₹1,00,000 crore
3. Profitability & Key Financial Metrics
- Net profit for Q3 FY25: ₹302 crore
- ROA: Currently at ~1.9%, targeting 4% by FY27
- ROE: Management guidance aims for 16-18% by FY27
- Credit cost guidance: 80-100 bps annually
- Net NPAs declined to 0.69%, showing strong asset quality improvement
4. Business Model & Growth Strategy
- Transition to Asset-Light Model: Increasing co-lending & loan assignments, reducing ALM risk.
- Co-lending partnerships: Expanded to 7 partner banks; 66% of disbursals now off-balance sheet.
- Sammaan FinServ Expansion:
- Current AUM: ₹7,250 crore
- FY27 Target: ₹15,000 crore
- Projected ROA: ~5%
- Branch Network Growth: Targeting 300-330 branches by FY27 from 214 currently.
5. Valuation & Market Perception
- Current Market Cap: ~₹10,500 crore
- Net Worth: ~₹20,000 crore
- Price-to-Book (P/B): ~0.525x, significantly undervalued vs. peers (NBFCs trade at 2-2.5x P/B).
- Potential Re-rating Catalyst:
- Achieving 4% ROA & 16-18% ROE
- AUM expansion to ₹1 lakh crore by FY27
- Credit rating upgrades due to improved asset quality
6. Risks & Challenges
- Stock price dependency on execution: Needs to deliver consistent ROE/ROA growth to gain market confidence.
- Warrant conversion risk: Current market price below warrant conversion price, raising concerns over full conversion.
- Competition in Housing Finance: Needs to maintain pricing discipline & underwriting quality.
- Dependence on Co-lending: Any disruptions in partner banks’ funding strategies could impact growth plans.
Conclusion & Investment Outlook
Sammaan Capital has successfully executed its transition from a legacy-heavy lender to an asset-light, tech-driven NBFC. With improving profitability, strong asset quality, and aggressive AUM growth plans, it is well-positioned for a significant re-rating in the next 3-5 years.
At 0.525x P/B, the stock appears deeply undervalued, considering its FY27 targets of ₹1 lakh crore AUM, ROA (targeted steady-state), moving towards 4%
, and 16-18% ROE. If the company executes as guided, a P/B re-rating to 1.5-2.0x could drive significant upside. However, near-term stock movement remains contingent on sustained ROE expansion & investor confidence in growth execution.