Aadhar Housing On Geographic Expansion Plans | NDTV Profit
Transcript
00:00Hello and welcome. You're watching NDTV Profit. I'm Harsh Saita and we have with us the management
00:13of Aadhaar Housing Finance. We have Mr. Rishi Anand, who is the Managing Director and CEO.
00:18Pleasure always speaking with you, Sir. Sir, first off, you know, you're well past your
00:25IPO, your debut. This is the first full quarter that you've, or rather half quarter you've
00:32spent, you know, but full quarter results that we've seen from you in terms of proper
00:38quarterly announcements. I want to first talk about growth. 20% plus your 20,000 crore in
00:45terms of AUM, roughly. 20% plus growth into the foreseeable future. Is that something
00:52that we can expect from you? Well, first thing first, good afternoon, Harsh, and it
00:56is likewise always a pleasure speaking to you. Yes, we have in the quarter that we're
01:02speaking about have clocked about 21% growth on AUM. Our AUM now reaches about 21,800 crores
01:08approximately. And we stand by the guidance that we've been given. AUM growth of anywhere
01:14between 22 to 23% and it is growth of about 18 to 20% is what we stand by. And things
01:20look bullish, things look good. Got it. Sir, with regard to your average loan size currently
01:28at around 10 lakh rupees, do you believe that this will change in any way materially going
01:36forward? Are you going more into tier one? Are you competing in cities or are you sticking
01:41with what your forte is? So Harsh, two things to it. One is yes, we are sticking to whatever
01:47core competencies we still cater to EWS LID segment where the requirement of loan or the
01:53size of the loan required is lower. Having said that, you know, when we talk about 10
01:59lakh average ticket size, it is on the AUM, on the book. If you look at the incremental
02:03ticket size, you know, over the past, I would say five, seven years, the cost of construction
02:08has gone up. The incremental ticket size for me on home loan stands at about 12 lakh rupees
02:13and loan against property, that is micro loan against property stands at about 8 lakhs.
02:17So yes, we have seen slight, I would say movement northwards on the average ticket size, which
02:23is primarily to do with the cost of construction going up. Got it. And so if I can ask, you
02:31know, your spreads have been fairly, fairly solid. Do you expect the 6% kind of spread
02:39to hold or do you expect some bit of expansion potential from here? So I would not say expansion
02:47potential, Harsh. We have been in the range of about 6%, which is also to do with, so
02:52basically two, three components to it, the COF and the yields, the incremental yields
02:56play a very important role. But if you look at the way the last year has gone, the complete
03:00last year, we have done a raise in the RPLRs a couple of times, which has led to the healthy
03:08spreads that you're looking at. As a guidance, we've always been saying that a spread of
03:125.7 to 5.8 is where the management is very, very confident and comfortable. Sure, but
03:20you've been doing much more than that. That's where I'm coming from, to try and gauge as
03:27to whether you can hold six, but it doesn't seem likely. You believe cost of funds will
03:31inch higher or do you believe yields are going to come off for you? No. So that's what I
03:35was trying to say, Harsh. You know, why is it looking at six is because of the RPLR increase
03:41that we did three times in the last financial year, starting from April onwards. So 25 bps,
03:4725 bps, 75 bps and 25 bps. That has taken your spreads higher to about 6%. But anywhere
03:55between 5.7, 5.8 is a comfortable spread and we would stand by it. Yes, our endeavor definitely
04:02would be to sustain the business model at 6%. But if I look at, if the question is,
04:09is flipped the other way around, is where will, you know, the competition, etc. impact
04:14our spreads? I would say no, but anywhere between the number that I indicated, 5.7 upward
04:20is comfortable. Got it. So let me change my question a bit. What do you believe will bring
04:27spreads down towards 5.7? What are those factors? So that is nothing that is going to affect
04:34the spreads downward. My incremental spreads today, if I were to look at one deal today,
04:40I would typically will be doing it about 5.7, 5.8%. And there is nothing, you know, when I have,
04:47what typically what will bring your spreads down, you know, competition brings your spreads down,
04:52you keep operating in a particular geography will, you know, push your incremental yields down.
04:59As a strategy, Aadhaar has adopted a strategy of expansion. Today, as we speak, coincidentally,
05:06we launched our 21st state in the quarter that we're speaking about, which is Himachal Pradesh.
05:11We are now 535 branches plus and expanding and growing, I would say, the strategy of deeper
05:18impact, we are going deeper into five states. So the moment you start going deeper, the intensity
05:24of competition goes down. So, you know, you'll have to maintain, that's what we're trying and
05:29the endeavor is to maintain a perfect balance between tier one, tier two and the rest of the
05:33country. So I don't foresee, you know, foresee any, you know, downward trend on my incremental
05:42yields or a substantial increase in my COFF, which is going to affect my spreads. COFF, yes,
05:50you know, you've seen, I would say approximately about 20-25 bps increase in COFF. But, you know,
05:55as I indicated, we are today at about 6%. So even at 20 bps increase in my COFF brings my spreads
06:01to about 5.8%. So I'm still comfortable. And what happens if rates come off? Because,
06:09of course, we had commentary coming in today, you know, the suggestion still seems to be,
06:14at least the commentary seems to be slightly hawkish. But what if that were to start to reverse,
06:21say, latter half this year, early next year, what happens to your numbers?
06:26So you're referring to the cost of fund going down? Yes, please. So if the repo were to go down,
06:31say, 25 bps? So the way it happens in our industry and at Aadhaar is today about 80%
06:38of my portfolio is floating in nature, which effectively means that if my cost of fund is
06:42going down harsh, I will have to pass it on to the consumer. And also let's say at 25 bps going
06:47down, I will pass on 25 bps to the consumer. But is there a lag to it? So there will typically be
06:52a couple of months of lag, which is implementation lag. So that's how it operates. Got it. I want
06:59to try and switch focus on geography. You spoke about it. You're in 21 states now. How quickly do
07:05you ramp up? So from a state perspective, Harsh, you know, if you remember, last time we spoke,
07:12we were in 20 states and I indicated that there are no more states to expand. We found opportunity
07:19in Himachal and we said, okay, Himachal is one state we should explore. We launched one branch
07:23and we will definitely look at more opportunities in Himachal. Having said that, I don't think we
07:27have any more state to expand. And that's where the concept of deeper impact comes into play.
07:32In phase one, we've identified five states like Rajasthan, Maharashtra, Andhra Pradesh, Telangana,
07:39Uttar Pradesh, and so on and so forth, where we have already started going deep. You know,
07:44and when we say deep, I'm not referring to rural locations at all. I'm referring to
07:48smaller talukas and smaller districts. We've already launched about 150 such branches. And
07:54as we move ahead in years to come, 75, the way we look at our business, 75 new branches
08:01year on year, which will be a combination of tier one, tier two, approximately about 20 branches
08:06in tier one, tier two, and the balanced branches in the deeper impact strategy.