TruCap Finance Limited
7,184words
123turns
0analyst exchanges
2executives
Management on call
Rohan Juneja
Managing Director and CEO
Sanjay Kukreja
Chief Financial Officer and Mr. Gaurav Bhargava - Business Head - Gold
Key numbers — 40 extracted
12.3 million
12.1
million
38.3 million
58.6 million
489 million
65%
36%
3%
2.18
billion
2.68 billion
3 billion
8.7%
Guidance — 20 items
Rohan Juneja
opening
“While growth has slowed, we have seen lower slippages and higher recoveries in the December quarter relative to September, which is an encouraging sign that we hope to continue building on.”
Rohan Juneja
opening
“Going forward, majority of the growth in non-gold loans will be driven by secured green energy financing, with disbursements in the unsecured MSME portfolio continuing to decline, as we have seen in the last few quarters.”
Coming to specifics on product
opening
“We anticipate further recoveries of 10 to 15 million by the end of this current quarter.”
Rohan Juneja
opening
“In terms of what we can do going forward, obviously, one is, the liquidity environment has to turn more favorable, and number two is certain other strategic initiatives that we are working on, which hopefully we will be able to tell you more about by the end of this month.”
Rohan Juneja
opening
“Prior to that, the gold was just kept in our branches, so you didn't have any income from the BC partnership in this quarter, and that's how it will be going forward.”
Rohan Juneja
opening
“So, we’re very hopeful that by the end of this month, there will be something definitive that we can disclose to all investors through an exchange filing.”
Rohan Juneja
opening
“Sir please drop your questions via email and all will be answered.”
Rohan Juneja
opening
“Ravi Kumar Sateja: When you guys don’t answer calls then what can I expect over emails.”
Rohan Juneja
opening
“It was a big pain point for us in fiscal 23 and 24, it has now hopefully stabilized, and we expect the net interest margin which we have always said is on a sustainable basis.”
Aditya Shah
opening
“And that can going forward you can maintain that?”
Risks & concerns — 14 flagged
The decline was due to a more selective credit approach, coupled with tighter liquidity in the NBFC sector, while interest income declined modestly quarter-on-quarter, our net interest margin which was a pain point for us in fiscal 23 and 24 has now risen for three consecutive quarters to 8.7% versus 8.2% in September 2024, and 6.7% in December 2023.
— Rohan Juneja
Going forward, majority of the growth in non-gold loans will be driven by secured green energy financing, with disbursements in the unsecured MSME portfolio continuing to decline, as we have seen in the last few quarters.
— Rohan Juneja
Prioritizing disbursements in secure green energy financing along with digital loan processing, will drive sturdy disbursements and portfolio expansion while ensuring strong control on risk mitigation through direct tie ups with OEMs and dealers.
— Rohan Juneja
Yeah, sure the fees and commission income saw a big decline in the quarter because we had a BC relationship with Shivalik Small Finance Bank in the gold loan product.
— Rohan Juneja
So, the revenue was about 49 crores in the quarter and in terms of profit, as you would have seen, we declared a profit of about Rs.12 million, which was up modestly quarter-over-quarter, but down year-over-year given the fact that disbursements have declined in the quarter, and the disbursement decline is largely been due to a tighter liquidity environment, and also for certain amount of noise in the MSME space.
— Rohan Juneja
Yeah, so the loan book growth for the December quarter, year-over- year the gold loan book went up 27% and overall, year-over-year growth was 35% in the AUM, quarter-over-quarter the book declined by about 5% which was led by 11% decline in the gold loan book and 8% in all the other segments decline.
— Rohan Juneja
Okay, so we were curious whether the servers and the system lies within our premises, or is there any risk in terms of data privacy or data security, if all the technology is residing on outside servers?
— Rohan Mehta
The servers, et cetera resides in our premises, so there's no risk related to that.
— Rohan Juneja
We get a little nervous with disbursing larger amount, just given the fact that you expose yourself to the risk of gold prices going down and reaching the LTV.
— Rohan Juneja
So that is something to be cautious about, but that is us as a company.
— Rohan Juneja
Sir, just to conclude, fees and commission revenue if you can give some light on that since it's been on the decline lately?
— Rohan Mehta
So, we have co-lending relationships in gold, but the BC relationship had got stopped from the previous quarter itself which is a big reason for why the decline was there and seen too.
— Rohan Juneja
For us there has been no impact on the repo rate decline so far, I think the macro environment right now at least for lenders who are lending to the MSME space or smaller NBFCs, I don't think much has percolated down to us or to some of the others, in terms of the decline of 25 basis points on the repo rate.
— Rohan Juneja
So, our NPC borrowers have largely come out from around 28,000 customers to about 21,000 so, it indicates like so can you help me understand the strategy, will it be lower risk, high value ticket customer or what is it?
— Rohan Juneja
Speaking time
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Opening remarks
Rohan Juneja
Thank you. Welcome to everyone for our Earnings Call for the Quarter Ended December 2024. For the quarter we reported earnings of 12.3 million versus 12.1 million in the previous quarter, for nine months fiscal 2025 we reported earnings of 38.3 million versus 58.6 million in nine months 2024, while the last two quarters have brought on some challenges, including tighter market liquidity conditions and a cautious credit environment that has led to slower growth, we remain committed to our core belief of supporting underserved and under banked MSMEs, including clean energy led MSME businesses. While growth has slowed, we have seen lower slippages and higher recoveries in the December quarter relative to September, which is an encouraging sign that we hope to continue building on. Interest income of 489 million grew 65% year-over-year supported by AUM growth of 36% year-over-year. Quarter-over-quarter interest income declined by 3% due to lower disbursements, which were 2.18 billion in th
Coming to specifics on product
The gold loan business has an active customer base of more than 57,000 and an average ticket size of 0.13 million. The tenure of these loans and origination is usually 12 months, but the average maturity on the books is typically six to seven. Our team has disbursed more than 40 billion to over 322,000 borrowers over the last four years. Gross NPAs in the gold loan book are just over 1%. In the December quarter, we recovered 8 million in gold GNPA accounts, while in the first half of this quarter so far we have already recovered more than 7 million in gold NPAs. We anticipate further recoveries of 10 to 15 million by the end of this current quarter. Additionally, for gold loans taken to auction due to these loans turning NPA, we have recovered more than 106% of principal and interest due and therefore refunded excess amounts to borrowers. In MSME business loans, including income generating green finance loans, we have an active borrower base of almost 34,000 customers and an average ti
Rohan Juneja
recoveries in the quarter stood at 76 million versus 12 million in September 24. We are hopeful of this trend continuing with enhanced efforts on collections and litigation. Lastly, the debt-to-equity ratio declined to 2.6x from 2.8x in the previous quarter, while the capital adequacy ratio stood at 26% versus 25.3% in September 24. With that, we now open the call for questions- and-answers. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press “*” and “1” on the touchstone telephone. If you wish to remove yourself from the question queue, you may press “*” and “2”. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Soham Shah from KRS Capital. Please go ahead. Thank you very much for giving me this opportunity to clarify my queries. My first question is, that we have seen the decrease
Soham Shah
Okay, understood. Are we also working on technology in disbursement of funds, any technology platform or is it mainly through our branches?
Rohan Juneja
So, we do all the disbursement, majority of the disbursements obviously in the gold loan business are through the branches. But the entire process is tech enabled. So, when a customer walks into our branch, the entire application process is through a tech-enabled process at the branches for the non-gold loan business, we have feet on street and along with that we also have a digital platform where applications are put in into the digital platform through which they come to the credit team, and then based on the decisioning from the credit team, along with a personal discussion, the money is disbursed to them digitally.
Rohan Juneja
All right, understood that’s good. Also, I have noticed that the fees and commission income has steeply decreased to almost 1/3 and it has kept decreasing since the same quarter last year. So, could you please maybe clarify or put light on this, what is this income and why has it been decreased? Yeah, sure the fees and commission income saw a big decline in the quarter because we had a BC relationship with Shivalik Small Finance Bank in the gold loan product. Unfortunately, from August that relationship we have to stop business given the fact that with the RBI guidelines in a BC relationship on gold loan, the gold had to be kept with the partner who is contributing the capital, which is the bank. So doing business on that basis where the gold had to be kept with the BC partner was very cumbersome. Prior to that, the gold was just kept in our branches, so you didn't have any income from the BC partnership in this quarter, and that's how it will be going forward. Okay. And how about the