Vinod Jain, Promoter and Managing Director, SRG Housing Finance Limited

24 Aug 2023 , 01:30 PM

Help us understand your company’s business model.

Established in 1999, we are a strong retail affordable housing finance company with rich expertise and experience. We offer door-to-door services tailored to client demographics and requirements. We have been actively enhancing our marketing and distribution reach through our presence in local consumer touchpoints.

We are the first company in Rajasthan to get registered with National Housing Bank (NHB).  Majority of our customers are self-employed, from rural & semi-urban areas in western & central India.

In FY 2023, we had total 62 branches compared to 37 in FY 2022 spread across five states namely Rajasthan (28 branches), Madhya Pradesh (17 branches), Gujarat (15 branches), Delhi (1 branch) and corporate office in Maharashtra.

We source loans mostly in-house; our Sales Application, Loan processing is done through digital tool Lead Management System and for complete Loan cycle we have in house ERP system FINWIN.

Our 100% loan book is secured with property as the collateral. As on June 30, 2023, of our total loan book, Housing Loan and Loan against Property constituted 64.91% and 35.09% respectively. Self Employed and Salaried constituted 76.39% and 23.61% respectively of our total customer mix; Rajasthan, Gujarat, Madhya Pradesh and Maharashtra constituted 57.41%, 29.56 %, 12.68 and 0.35%; respectively of total state wise loan book. 

The average ticket size of our housing loan book is Rs. 5 lakh and the average LTV is 40%. Gross NPA was 2.50%, Net NPA was 0.51%, Our average borrowing cost was 10.82%.

What are your strengths versus your other listed peers?

Niche player: We are a niche player focused on providing small ticket loans to customers that are new-to-credit and have non-formal source of income. 

Underwriting experience: We serve in Tier 2 and tier 3 cities where we have experience of more than 2 decades.

Strong liquidity: We enjoy strong liquidity position. In FY 2023, our company had liquid funds of Rs. 100 crore, of which Rs. 80 crore are undrawn funds.

Strategic market presence: We have a strong presence in rural and semi-urban markets with low penetration, with 91.49 % of total loan mix coming from rural regions and balance from urban regions.

Highlight the key macro opportunities for your company.

Government’s initiative towards providing “Housing for All” is amongst the key macro opportunities for the company. The Budget 2023-24 entailed an increased focus on affordable housing, with about a 66% hike in the fund allocation under the Pradhan Mantri Awas Yojana (PMAY) increasing the outlay to Rs. 79,590 crore. (Source) The government has set a target of construction of two crore 95 lakh houses by March next year.  The Minister informed that 2 crore 93 lakh houses have already been sanctioned to the beneficiaries by various States and Union Territories. (Source)

The addressable target market for the underserved population in the unorganized sector is over Rs. 1 lakh crore under affordable housing sector. Rising affordable housing demand, limited availability of housing finance for clients with low income, urbanization, rise in nuclear families and the increasing need for self-owned houses are the key drivers of demand for housing loan in the coming years. 

What are the key strategic priorities of your company? 

We will continue to serve unserved and underserved population and the first time home loan seekers of India. We will be looking to expand our presence in newer states such as Karnataka, Tamil Nadu, Telangana and Andhra Pradesh in the coming years. Our focus is to achieve Rs. 700-750 crore AUM over the next 12-18 months with sustainable business metrics.

You lend to a segment perceived to be riskier, how are you mitigating credit risks while maintaining your growth?

We have put in place an income assessment matrix of every business in rural areas.  We have geography-based credit and collateral policy with each business line.  Our pre-disbursement process ensures completion of a comprehensive verification of all borrowers’ credit profiles and recovery procedures using a well-designed credit evaluation process.

Run us through your liability mix. What is your credit rating?

We have a well-diversified liability mix. Our outstanding borrowing in Q1FY24 stood at Rs. 403.80 Crore comprising of 48.22% from Banks, 7.19% from NCD, 34.98% from Financial Institutions, and 9.61% from NHB. 

Our lender base includes National Housing bank, PSU Banks, private banks and Financial Institutions. The private banks includes- HDFC, IDFC, DCB, SIB, Federal, AU and Utkarsh. PSU banks includes -SBI, UCO, Union, PNB, IOB and Financial Institutions includes – Shriram, Bajaj, Sundaram, LIC, Mas Hinduja, Chola, Hero, Tata, NABARD, STCI. 

Our credit rating is CARE BBB; Stable. 

Give us a snapshot of your company’s financial profile

In FY 2023, our Net worth increased by 17.16 % to Rs. 133.26 crore compared to Rs. 113.74 crore last year, Gross Asset Under Management increased by 28.92 % to Rs. 438.36 crore compared to Rs. 340.01 crore in last year, New approvals stood at Rs. 202 crore compared to Rs. 89 crore in FY 2022, Disbursements increased to Rs. 191 crore compared to Rs. 85 crore in FY 2022. Our outstanding loan book increased to Rs. 438 crore compared to Rs. 340 crore last year. 

In Q1-FY 24, we reported the highest ever disbursement in first quarter of Rs. 53 crore. Gross Loan Book increased by 35.9% year-on-year (Y-o-Y) to Rs. 474 crore, Loan Disbursement increased by 105% Y-o-Y to Rs. 53.11 crore, Loan Spread continued to remain strong at 12 % and Shareholders fund increased by 16.1 % Y-o-Y to Rs. 137.7 crore.