00:00 afternoon to all the viewers. One company that is in focus in today's session is Canfin Homes,
00:06 and this is on the first quarter numbers that have been reported. Clearly, if you go to see
00:10 the net interest margins, it has been a positive for the company as well as the NII. And the lower
00:17 provisions is something that is working really well. Joining us on the show to discuss more on
00:22 the future roadmap is Mr. Suresh S. Iyer, MD and CEO at Canfin Homes. Good afternoon, Suresh,
00:28 and welcome to the show. Firstly, let me congratulate you for the first quarter numbers.
00:32 Yeah, good afternoon. Thank you. Thank you for inviting us.
00:36 Always a pleasure. Suresh, my first question coming to you is overall,
00:40 clearly the earnings have beat what the street was estimating, and that is mainly driven by
00:45 the expansion that the company has seen on the net interest margins front. The first question is,
00:52 is this number sustainable in terms of the coming quarters as well? And if you have to
00:57 look at FY24 as a whole? Well, yes, the numbers have, I think, are sustainable because in the
01:06 beginning of the year, we had indicated that there is a part of the portfolio which is yet to
01:10 experience the rate hike, the repo rate hike, which is there because we are having a lagged
01:15 effect because of an annual reset option that we offer to the customers. So now, a majority of the
01:20 customers now have already experienced it, and there is still a small portfolio which is yet to
01:25 experience that rate hike. So going forward, we should be able to look at it. And we are working
01:31 on the borrowing costs also. So we should be able to maintain this NIM numbers. Right. Apart from
01:36 that, Suresh, the credit cost is something which was slightly higher in this quarter as compared to
01:42 what the street was estimating, but that was mainly on the back of the slippages that we've seen from
01:46 the restructured pool of advances. Where does it stand currently? And what is the target that the
01:52 company has towards the end of the year? Well, we have a gross NP of 0.63, which is a little
01:59 higher compared to the 0.55, which we had in March. But that's mainly because we had an 18
02:04 crore slippage from the restructured book, which we had already indicated at the beginning of the
02:09 year itself, because the entire restructured book of about 695 crore has started to come out from
02:15 the restructuring in February only. So the first quarter was the first time when we actually
02:20 estimated. We had indicated that probably there could be up to 10% slippage, which is in line with
02:24 the market on the restructured book. However, the numbers show that in the February, March,
02:30 whatever has happened and the three months have elapsed, only about 18 crores, which is about 8.67%
02:37 has slipped into NPA. So that's a little better than what we had anticipated. But we will stick
02:43 to the numbers that we had given at the beginning of the year, that we could end up probably not
02:47 more than 0.7% in gross NPA. Right. If you talk about the incremental disbursements as well,
02:55 right, and that also if you're talking at a higher interest rate, you already mentioned about it,
02:59 the repricing that has happened already in the first quarter, that is something which is actually
03:05 offset the impact of, you know, in terms of cost of funds, right? Now, going ahead as well,
03:12 what's the quantum of repricing that can be expected? And by how much will it improve the
03:18 yields according to you? Well, we had, we have still have about 12,500 crores of the blown book,
03:25 which is yet to experience one rate hike rate cycle, because we are in, we had done it in three
03:31 tranches last year. So we still have a lot of if I spread it over the rest of the nine months,
03:36 then we have about three to five bips, which can still go up from here. But that is on the asset
03:41 side, we can still look at about three to five bips, which can we still have on the entire book.
03:46 Okay. And overall, if you see in terms of asset quality as well, as you mentioned,
03:54 slippages, you're staying with the number that you've given in terms of FI 24. What according
04:00 to you will be the key monitorables, you know, for the company in FI 24?
04:06 See, we have a growth target of about 18 to 20%, which we have indicated. As of now, we are on
04:12 target. And one of the key monitorables or one of the key aspects that we are looking at to get this
04:16 growth is increasing the ticket size, because we are also looking at APF as a model, tying up with
04:23 builders for their projects and approving the projects from where we can get bulk business
04:27 and direct business as well. So this is one aspect which will be monitorable. We have also
04:33 indicated about 15 branches that we plan to open during the year. And we are on track about four
04:39 branches we should be opening in this quarter that is Q2 and the balance in the next two quarters.
04:44 So that also we are on track. So hopefully, these are the few monitorables. Obviously,
04:48 the restructured book which we have indicated will also be a monitorable, we are closely
04:52 monitoring it and we are looking at this. We plan to work on the NPA also so that we don't cross
05:00 that target. Basically, these are the three things on the NIM side, we are confident we should be
05:04 able to maintain this. But one thing that you mentioned Suresh right now is in terms of
05:09 you know, the way the ticket size movement will happen. So currently, what's the average ticket
05:15 size and if you're seeing a demand, which is higher in you know, higher ticket size properties,
05:20 what will that average ticket size actually move to?
05:25 In Q1, we had a ticket size average ticket size on the home loan book of about 22 lakhs.
05:30 And the APF that we are talking about for tying up with builders and approving the projects,
05:36 those projects we are targeting out 25 to 1 crore kind of property values. So there the ticket
05:42 sizes will be slightly higher. So hopefully, we should end up somewhere between 25 to 27 lakh as
05:46 the average ticket size by the end of the year. Right. Another aspect I want to consider with
05:51 you is with regards to the commission to the DSAs. Now, in terms of the business model,
05:56 currently 80% of the channel mix comes in with regards to contribution from DSAs,
06:02 where the company pays almost around 40 to 43 basis points kind of commission, right? You have
06:09 been moving to a model in terms of where you're looking to do tie ups, which are direct tie ups
06:14 with developers. If that happens, how are you seeing the channel mix change? Where is it currently?
06:20 Where do you know by when do you see it actually more in favor of the developers? And by how much
06:26 will you be able to save in terms of the commissions? See, the DSA channel is a critical
06:35 sourcing channel for us. So it is not that we are going to cut back on the DSA channel, but we are
06:40 trying to push the direct business as well. So going forward, while the DSA channel will continue,
06:45 and we will continue to probably get the same amount of business, but we are looking at a
06:49 direct business contributing about 20% of the, you know, this DSA, this business coming from the
06:56 APF product, and this APF tie ups contributing about 20% of the incremental business in about
07:01 two years time. So this 80% that we are seeing today should come down to around 60%.
07:06 Right. And so that's the view that we have so far. Thank you so much for joining us on the show,
07:13 because this gives us a lot of clarity in terms of what's in store for the company. And in any ways,
07:18 the first quarter has actually performed really well as well. So lots to watch out for going
07:24 ahead. Thank you. Stay safe and speak to you soon again. So that's the management of Campin Homes,
07:28 clearly indicating in terms of what's the strategy going to be with regards to the coming quarters,
07:35 they do maintain the FY24 guidance that they have initially given as well in terms of the AUM
07:41 growth, which is around 18 to 20%. However, the slippages is something that the company is
07:47 monitoring closely. And if you talk about, you know, the restructuring of the book,
07:53 that is something which will help them offset the impact of the cost of capital as well. So that's
07:59 a key highlight in terms of Campin Homes. That's all that we have in this session. Lots more lined
08:03 up on the other side. Please stay tuned to BQ Prime.
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