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Finance company Arman Financial Services announced Q4FY24 & FY24 results:
- Growth momentum has continued driven by Micro-Finance and MSME business segments. Consolidated Asset Under Management (AUM) stood at ~Rs 2,639 crore which grew by 36% on a YoY basis.
- Disbursements for the FY24 stood at ~Rs 2,297 crore, registering a growth of 30% YoY compared to ~Rs 1,767 crore.
- Disbursements for Q4FY24 stood at ~Rs 669 crore, registering a growth of 6% YoY.
- Net total income for FY24 amounted to ~Rs 396 crore, registering a 57% YoY growth, while Q4FY24 net total income grew by 40% to ~Rs 120 crore.
- Pre-Provision Operating Profit (PPoP) for FY24 registered a 73% YoY growth to ~Rs 293 crore.
- PPoP for Q4FY24 grew by 40% YoY to ~Rs 88 crore
- Profit After Tax for FY24 stood at ~Rs 174 crore, reflecting a YoY growth of 85%.
- Shareholders' Equity as of Mar 31, 2024, stood at ~Rs 813 crore, calculated in accordance with IND-AS standards.
- For FY24, Return on Average AUM stood at 7.58%; while Return on Equity stood at 27.76% (ROE calculation includes QIP proceeds of ~Rs 230 crores raised in the last week of December 2023, which was yet to be fully deployed)
Borrowing & Liquidity Profile:
- Total borrowings stood at ~Rs 2,261 crore (Including off balance sheet direct assignment (DA) liability)
- Of the total borrowings, 41.1% is through Banks, 13.8% is through NBFCs, 13.5% is through debt and NCDs, 3.0% is through PTC, 23.5% is through direct assignments (off balance-sheet liabilities) of which (18.78% Direct Assignment is through Banks and 4.75 % Direct Assignments is through Financial Institutions) and the rest is borrowed from DFIs (i.e., NABARD & SIDBI) and others. The company is successfully diversifying its funding sources. It has raised ~Rs 89 crore through listed Non-Convertible Debentures (NCDs) in FY24.
- As on 31st March 2024, the Company has a healthy liquidity position with ~Rs 179 crore in cash/bank balance, liquid investments, and undrawn CC limits.
- Additionally, the Company has ~Rs 320 crore undrawn sanctions from existing lenders.
Collection Efficiency:
- Collection efficiency FY24 stood at 97.7%.
- Segment wise collection efficiency for FY 2024 stood at:
- Microfinance segment – 97.6%
- MSME segment – 98.4%
- 2W segment – 96.4%
Asset Quality:
- GNPA stood at 2.88%; NNPA stood at 0.31%
- Cumulative Provisions stood at ~Rs 90.16 crore as on 31st March 2024 (covering 3.42% of the consolidated AUM, 4.20% on book)
Commenting on the Company’s performance, Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services said, “After the initial two years of COVID-induced stress, the economy has made a significant recovery during the last two financial years. This rebound has positively impacted various sectors, particularly the microfinance and the MSME sectors. As a result, the industry has recorded steady and sharp growth over the last 2 years, with all parameters showing excellent results. Key indicators such as disbursements, AUM Growth, Opex, cost of borrowing, and asset quality have all shown improvements or have remained stable, reflecting the resilience and adaptability of the industry.
Throughout the year, the sector maintained its momentum without any major negative news. This stability was bolstered by effective risk management practices and efficient last-mile delivery of credit to the customers. The consistent performance and positive developments have set a solid foundation for continued growth in the sector in the coming years. As a result, the credit ratings were upgraded to A- (Outlook Stable) by CARE Ratings in March’24 for both Arman & Namra.
Now, turning to Arman’s FY24 consolidated performance, the company has implemented stringent credit filters, resulting in a high rejection rate but ensuring that we maintain a high-quality loan book. Despite the rigorous screening process, we reported 30% growth in disbursement to ~Rs 2,297 crore, driven by robust and consistent demand during the review period. Our Micro-Finance and MSME AUM reported a 35% and 44% YoY growth respectively.
This growth was also fuelled by the favourable economic environment and the revised regulatory framework issued by the Reserve Bank of India. Our consolidated Profit After Tax as on Mar-24 stood at ~Rs 174 crore, registering a growth of 85% YoY.
Furthermore, Arman has always embraced a progressive approach, which has been instrumental in sustaining growth while maintaining asset quality and collection efficiency. Our gross non-performing assets (NPA) stood at 2.88%, and net non-performing assets were at a low 0.31% for the period.
Regarding branch expansion, we have opened 67 new branches over the last twelve months, bringing our total branch count to 402. This expansion has been complemented by our successful penetration into newer states and geographies where the performance has been promising. Of the new branches opened in FY24. In addition, we have also initiated the Rural Micro-LAP product pilot in Q4. While it is too early to comment, we are bullish on this product gaining significant traction in the long run.
Over the last year, the company initiated several new technological initiatives, such as Aadhaar based Biometric eSign, launch of new HR software, live staff tracking, streamlined paperless loan origination, AI Bot Calling, Monitoring App for Audit/Supervisors, launched Business Intelligence Unit using Advance Analytics, and many other initiatives.
During the year, the company also concluded its a fund raise by way of a QIP of ~Rs 230 crore, which makes us adequately capitalized for future growth. We are confident that we are on the right track to achieve our strategic goal of building over ~Rs 5,000 crore of Assets Under Management while maintaining a balanced debt-to-equity ratio. This solid financial foundation and our strategic initiatives position us well for continued growth and success.”
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