Aptus Value Housing Finance India Ltd (APTUS) Q2FY27 Concall Transcript - Sep-2026 Qtr
Iqra Ansari: Good evening, ladies and gentlemen. I'm Iqra Ansari, moderator for this conference. Welcome to the earnings conference call of Aptus Value Housing Finance India Ltd to discuss its results for second quarter and half year ended September 30th, 2026. This conference call may contain forward-looking statements based on the company's beliefs, assumptions and expectations as of today. These statements are subject to risks and uncertainties and actual results may differ materially. At this moment, all participants are in the listen-only mode. Later we will conduct a question and answer session. At that time, if you have a question, please press star followed by one on your telephone keypad. Please note that this conference is being recorded. We have with us today, Mr. M. Anandan, Executive Chairman, Mr. P. Balaji, Managing Director, Mr. C. T. Manoharan, Executive Director and Chief Business Officer, Mr. Sanjay Mittal, Chief Financial Officer. I would now like to hand the call over to Mr. Anandan for his opening remarks. Thank you and over to you, sir.
M. Anandan (Aptus Value Housing Finance India Ltd): Thank you. Good evening, ladies and gentlemen. I am Anandan, Executive Chairman of the company. I warmly welcome you all to this earning call. Aptus continued to deliver healthy growth during the quarter with continued demand from our target customer segment, leading to assets under management growing by 20% year-on-year. Disbursements remained healthy, supported by new branch across existing and newer states. Aptus maintained healthy profitability during the quarter, with the total net income growing by 19% year-on-year. Return on assets, return on equity stood at 7.7 and 21.1% among the best in the industry. On the asset quality front, we remain
M. Anandan (Aptus Value Housing Finance India Ltd): focused on maintaining portfolio quality through disciplined underwriting and continued strengthening of our operating framework, including collections. Looking ahead, the long-term growth prospects for affordable housing finance remains encouraging. With sustained demand across our markets and continued expansion of our distribution network, we remain focused on delivering consistent growth, operating efficiency, and healthy profitability. Our priorities for the remainder of FY '27 remain focused on sustaining growth momentum, maintaining portfolio quality, and prudent risk management. As we continue to scale, our emphasis remains on translating business growth into sustainable earnings, healthy returns, and long-term value for our value creation for our shareholders. Thank you. And I will now hand over to Mr. Balaji to take you through the quarterly performance in greater detail. Thank you.
P. Balaji (Aptus Value Housing Finance India Ltd): Thank you, sir. Good evening to all. Before discussing our quarterly performance, I would like to highlight an important aspect of our business. Aptus operates as a diversified lending franchise through two distinct entities. One is the housing finance company, primarily focused on affordable housing finance, and an NBFC catering to the financing needs of small businesses. As indicated in our previous earnings call, starting this quarter, we have commenced separate disclosures of key business and financial parameters for our housing finance company and NBFC businesses. This will provide investors with greater visibility into the performance, growth drivers, asset quality, and profitability of each businesses while also enabling a better understanding of Aptus as a diversified lending franchise. I'm happy to share that we continued to deliver healthy growth during Q2 FY '27, with our overall AUM crossing 14,000 crores. The strategic initiatives outlined during our earlier earnings call are progressing well, and we remain focused on balancing growth with profitability while maintaining our credit discipline. Our affordable housing finance company continued to perform well, delivering healthy growth and profitability, with AUM crossing 10,000 crores. The segment remains structurally robust and continues to offer significant long-term growth opportunities. Our NBFC is also gaining significant scale, with AUM crossing approximately 4,000 crores. As the business grows, we are focused on strengthening its underwriting and operating framework, embedding greater process discipline in terms of collections and risk management. We continue to advance the strategic initiatives outlined in our last earnings call to strengthen the growth momentum. The first thing is the branch expansion. We continue to expand our distribution network through new branches in both our newer geographies of Maharashtra and Odisha, as well as deeper penetration in existing markets. During H1 FY '27, we added nearly 50 branches, taking our total branch network to around 400. Importantly, branches opened in recent months have already started contributing to business growth, with their contribution increasing as they mature. Then the next one is the strengthening customer acquisition. We continue to diversify our sourcing channels through our direct sourcing network, expanding connector network, and digital marketing initiatives. The connector channel contributed nearly 12% of our incremental business during the quarter, and we continue to see encouraging traction across our sourcing channels. The next one is the increasing average ticket size. Our continued focus on increasing the average ticket size, supported by inflation and a calibrated customer selection strategy, is enabling us to onboard higher-quality customers while sustaining healthy business momentum. This further strengthens our portfolio quality and supports sustainable long-term growth. Next one is the customer quality and pricing. Our calibrated reduction in lending rates on select loan ticket sizes, together with our strategy of increasing the average ticket size, continues to support customer acquisition while helping us onboard higher-quality customers. Additionally, we are further strengthening our underwriting and collection infrastructure within the NBFC business to enhance portfolio quality. Going forward, we remain focused on disciplined execution of these initiatives while addressing the recent challenges in the collections and asset quality, particularly within the NBFC business.
P. Balaji (Aptus Value Housing Finance India Ltd): income stream, calibrated geographic expansion, productivity and digital excellence. We believe these initiatives position us well to deliver sustainable growth while maintaining profitability and credit discipline. Our execution on various strategic initiatives during H1 FY '27 continues to support our full year outlook with healthy performance across most operating and financial parameters. Growth: H1 disbursement grew 27% year-on-year to 2,206 crores. The disbursement in Q2 grew 20% year-on-year to 1,153 crores. While business momentum remains healthy, factoring in recent weather-related interruptions and tightening of NBFC underwriting, AUM growth is likely to moderate a bit in Q3. However, we are confident of achieving the momentum back in Q4 FY '27. Branch expansion: We have already added 60 branches in H1 FY '27, keeping us on track to achieve our full-year target of around 70 branches. Spread: Spread moderated marginally by 10 basis points on a sequential basis during the quarter. Operating expense remained at 2.8%, within our guided range of 2.6% to 2.8%. Now coming to the credit cost, credit cost in our HFC business remained well-controlled. In the NBFC business, while credit costs are elevated, but remain broadly comparable to industry levels. Our focus is on bringing them down further through disciplined underwriting, process improvements, and strengthening of our collection infrastructure as the business reaches a meaningful scale. Factoring in the elevated overdues in the NBFC, we have revised our consolidated FY '27 credit cost guidance by around 5 to 10 basis points. ROE remained above 20%, consistent with our profitability guidance, which remains unchanged. Overall, we remain focused on delivering healthy growth and industry-leading profitability while further strengthening our operating framework, particularly within the NBFC business. While we have recalibrated our growth outlook and credit cost expectations, our guidance on operating efficiency and profitability remains unchanged. Now moving on to performance. As regards the business growth and scale, AUM grew by 20% year-on-year to 14,177 crores. The half-year growth in disbursement was at 27%, and disbursement in Q2 grew 20% year-on-year. Branch network stood at 397 branches, adding 58 branches in the first half. Asset quality: The collection efficiency stood at 98.35 versus 98.52, primarily impacted to an extent by some moderation in collection within the NBFC. Consequently, our 30+ DPD stood at 7.08% as against 6.87%. We remain confident of improved collections and a gradual normalization of asset quality metrics to earlier levels by the end of FY '27. GNPA for the HFC business stood at 1.48%, while the NBFC business reported a GNPA of 2.17%. On a consolidated basis, GNPA stood at 1.68% compared to 1.7% in Q1 FY '27. The credit cost for HFC came in at 25 basis points, while the NBFC reported around 1. 159 basis points for the first half of the year. The credit cost for the consolidated entity came in at 67 basis points for the first half of the year. Profitability and efficiency: During the quarter, net income margin grew by 19% year-on-year to 463 crores. Our spread moderated marginally to 8.9%. Our opex as a percentage of AUM was at 2.8%. Profit grew 18% year-on-year to 267 crores, translating to an ROA and ROE of 7.7 and 20.1% respectively. The profit growth for the half-year came in at 19% year-on-year to 528 crores, translating to an ROA and ROE of 7.7 and 20.1%, which is amongst the highest in the industry. Funding: During Q2, we raised approximately 950 crores on a consolidated basis, primarily through a mix of term loans, securitization and direct assignments. Our liability profile continues to remain well-diversified, with 64% from banks, NCDs at 11%, securitization and DA at 18%, and the balance through NHB. We continue to maintain a strong liquidity position, with total liquidity of 1,759 crores as of September '26, including 1,028 crores of unavailed bank sanctions, providing us ample headroom to support growth.
Iqra Ansari: and answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and two. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
P. Balaji (Aptus Value Housing Finance India Ltd): There was no write-offs.
Iqra Ansari: First question is from the line of Renish from ICICI Securities. Please go ahead.
Renish (ICICI Securities): Yeah, hi sir. Congrats on a good set of numbers. Yeah, hi. Sir, just two things. So, one on the growth side, right? So, when we look at the disbursement for first half, and you know, when we back calculate the disbursement run rate to arrive at 22% growth, I think the ask rate is roughly 2,800 crore plus for the second half. And now you know, given the way micro is currently, how confident we are that you know we'll be delivering 22% growth in FY '27?
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