India Shelter Finance Reports 31% AUM Growth, Maintains Asset Quality
India Shelter Finance Corporation reported strong Q2 results with a 31% year-on-year growth in Assets Under Management (AUM) to Rs. 9,252.00 crores. Disbursements grew by 12% to Rs. 931.00 crores. Net profit increased by 35% to Rs. 122.00 crores. The company added 9 new branches, totaling 299. Asset quality remained stable with Gross Stage-3 at 1.20% and Net Stage-3 at 0.90%. Cost of funds decreased by 10 bps to 8.50%. The company targets 30-35% loan growth and aims to maintain spreads above 6%. The Board approved ESOP schemes for branch managers, covering approximately 500 employees.
*this image is generated using AI for illustrative purposes only.
India Shelter Finance Corporation, a prominent player in the affordable housing finance sector, has reported robust growth in its Assets Under Management (AUM) for Q2, despite facing industry-wide challenges. The company's strategic focus on Tier-2 and Tier-3 cities, coupled with its emphasis on self-employed customers in the affordable housing segment, has contributed to its strong performance.
Key Financial Highlights
- AUM Growth: The company's AUM reached Rs. 9,252.00 crores, marking a significant 31% year-on-year growth.
- Disbursements: Q2 saw disbursements of Rs. 931.00 crores, representing a 12% growth.
- Network Expansion: 9 new branches were added, bringing the total to 299 branches.
- Profitability: Net profit increased by 35% year-on-year to Rs. 122.00 crores.
- Return on Equity: Stood at 17%.
Asset Quality and Financial Metrics
India Shelter Finance has maintained stable asset quality metrics, demonstrating resilience in a challenging environment:
| Metric | Q2 | Year-on-Year Change |
|---|---|---|
| Gross Stage-3 | 1.20% | Unchanged |
| Net Stage-3 | 0.90% | Unchanged |
| Cost of Funds | 8.50% | Decreased by 10 bps |
Business Outlook and Strategy
The company has reiterated its guidance for the coming periods:
- Loan Growth: Targeting 30-35% growth
- Spreads: Aiming to maintain above 6%
- Credit Costs: Expected to be in the range of 40-50 basis points
Management noted some seasonal challenges in Q2, particularly due to rains and GST implementation delays. However, they expect improved momentum in the second half of the fiscal year.
Focus on Employee Retention
In a significant move to boost employee retention and align staff interests with the company's long-term goals, the Board has approved ESOP schemes for branch managers. This initiative is set to cover approximately 500 employees, potentially reducing attrition rates and enhancing operational stability.
Market Position and Competitive Edge
India Shelter Finance continues to leverage its strong presence in Tier-2 and Tier-3 cities, focusing on self-employed customers in the affordable housing segment. This strategic positioning has allowed the company to tap into a growing market while maintaining asset quality.
Funding and Liquidity
The company's funding profile remains robust:
- Cost of funds decreased by 10 basis points to 8.50%
- Management expects a further 20 basis points reduction by year-end
- Diversified borrowing from over 30 counterparties with an average tenure of about 8 years
Conclusion
India Shelter Finance Corporation's Q2 results demonstrate its ability to grow sustainably while navigating industry challenges. The company's focus on underserved markets, coupled with prudent risk management, positions it well for continued growth in the affordable housing finance sector. However, investors should remain vigilant of potential asset quality pressures and broader economic factors that could impact the sector.
As the company continues to expand its network and enhance its operational efficiencies, it appears well-positioned to capitalize on the growing demand for affordable housing finance in India's smaller cities and towns.
Historical Stock Returns for India Shelter Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.77% | -6.26% | -1.79% | -0.65% | +31.29% | +58.14% |
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