Analyst Meet / AGM - Analyst Meet

06-May-2015, 08:15
SKS Microfinance conducted an analyst meet on 06 May 2015 to discuss company financial performance for the quarter ended March 2015 and prospects. Dilli Raj, President of the company addressed the meet:

Highlights:

• Loan disbursements surged 44% to Rs 6891 crore in FY2015. Non-AP Portfolio galloped 47% Rs 4171 crore at end March 2014.
• The total number of loans disbursed witnessed a 39% growth to 18.57 lakh in Q4FY15 from 13.36 lakh in Q4FY14.
• The company raised incremental debt of Rs 5020 crore in FY15, up 43% over Rs 3503 crore in FY14.
• In FY15, the Company completed securitization transactions worth Rs 1559 crore, issued Non-Convertible Debentures worth Rs 200 crore and commercial paper worth Rs 225 crore. A QIP issue of Rs 398 crore was completed in May 2014.
• The company has reduced the cost of borrowing by 180 bps during last two years, which company attributes to the downward adjustment to the risk premium.
• In Q4FY15, cost-of-interest-bearing liabilities reduced by 1.1% from 12.9% in Q3FY15 to 11.8% in Q4FY15.
• As per the company, the southward movement in the cost of borrowings would be sustained in FY2016.
• Capital adequacy of the company was healthy at 31.7% at end March 2015.

Fee income

• During FY2015, the company generated an income of Rs 23.7 crore (net) from sales of mobile phones and solar lamp to customer compared with Rs 8.2 crore in FY2014.
• The company facilitated sales of about 4.5 lakh mobile phones and 3.9 lakh solar lamps in FY2015.
• The company targets to improve such fee income to 20% of PAT in the medium term from 12.6% in FY2015.
• The company also targets to improve the share of loan portfolio against distribution of such items to 10% of total loan portfolio over medium term, from 1.4% in FY2015.

Small finance bank license

• The company has applied for a small finance bank (SFB) license with the Reserve Bank of India (RBI).
• The company has about 98% loans qualifying for priority sector loans (PSL) status, as against SFB requiring about 75% PSLs.
• The current operating model of the company would remain unchanged, even if the company succeeds in getting SFB license.

Rural economy

• The company has only 4% direct agriculture loan exposure at end March 2015.
• As per the company, two years old figures show that about 65% of the rural income comes from the non-farm activity, while farm activity contributes 35% of the rural income.
• The company hopes the rural cash flows to remain healthy.

High cash balance

• The company held about Rs 1437 crore of cash at end March 2015.
• As per the company, the high cash position is useful to fund the growth of first quarter of the financial year.
• However, the company expects cash level would drop to lower level of Rs 300 crore, as the banks will be required to meet PSL targets on quarterly basis from FY2017 against annual basis currently boosting the demand from PSL loans throughout the year.

Guidance for FY2016

• The company overachieved the non-AP loan book goal of Rs 4000 crore with actual non-AP loan book at Rs 4171 crore at end March 2015 rising 47% over Rs 2837 crore at end March 2015. The company has targeted 44% growth in non-AP loan book to touch Rs 6000 crore by end March 2016.
• The Company has targeted incremental debt requirement of Rs 7000 crore in FY2016 compared with Rs 5020 crore in FY2015.
• The net profit (post MAT @ 21%) is targeted at Rs 235 crore for FY2016 compared with Rs 188 crore for FY2015.

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