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SRG Housing Finance Limited
Sponsored by BSE Investor Protection Fund ICRA Online Limited |Page | 1
SRG HOUSING FINANCE LIMITEDIndustry: Housing Finance
SRG Housing Finance Limited
•Housing FinanceSector
•March 10, 1999Date of Incorporation
•321, S.M. Lodha Complex, Near Shastri Circle, Udaipur‐313001, Rajasthan, India.
Registered Office
•Vinod JainManaging Director
•Tanushree TrivediCompany Secretary
•M/s Valawat Jha Pamecha & Co.Auditor
•www.srghousing.comWebsite
65.01
34.99Promoters
Public & others
Source: Company DRHP
Pre Issue
The company has a variety of home loan products that
are customized to the requirement of the borrowers. The
loan amounts range from Rs. 50,000 to Rs. 1,00,00,000.
The home loan products are classified into two
segments‐ a) Individual home loans b) Loans against
property.
The outstanding loan portfolio has grown at a CAGR of
24.13% from Rs. 318.89 lakh as on March 31, 2008 to Rs.
757.13 lakh as of March 31, 2012.
Presently the company has one head office and three
satellite centers located in Rajasthan. Further it is also
targeting to open another ten satellite centers in tier‐2
and tier‐3 cities.
The company has a well diversified loan portfolio across
all the business classes comprising both salaried and non‐
salaried persons. As on March 31, 2012, loans to salaried
and non‐salaried constituted 13.41% and 86.59%
respectively.
The total borrowings advanced by the Company, as at
March 31, 2012, were Rs. 347.86 lakhs, and the CRAR
(Capital to Risk weighted Assets Ratio) as at March 31,
2012 amounted to 82.14%.
Business Summary (Key Business Highlights)
Background & History
Share Holding Pattern as on June 2012 (in %)
No. of Shares Outstanding prior to issue 4,576,500
No. of Shares offered
a. Reserved for Promoters 498,000
b. Reserved for Market Makers 4,08,00
c. Net issue to the Public 2,598,000
Total 3,504,000
Equity Shares outstanding after the issue 8,080,500
Minimum Application Size (No. of Shares)
a. For QIB and NII 12,000
b. For Retail Individuals 6,000
Face Value (in Rs.) 10
Issue Price (in Rs.) 20
Issue Size (in Rs.) 70,080,000
Book Value per Share (in Rs.) 16.10
Issue Details
The Company was incorporated as Vitalise Finlease Private
Ltd. with the Registrar of companies, Jaipur. On December
2, 2000, the name was changed to S.R.G. Housing Finance
Pvt. Ltd. and subsequently was converted to a public
limited Company. The name was further changed to SRG
Housing Finance Ltd., on June 15, 2012 and a fresh
certificate of incorporation was issued on June 18, 2012. It
provides housing finance in Rajasthan. It is registered with
National housing bank (NHB) and has 7 associate
companies. Its group Companies, SRG Securities Finance
Ltd., Satkar Finance Pvt. Ltd. and SRG Insurance Brokers Pvt.
Ltd. operate with 22 branches. During FY2011‐12, SRG
Housing’s loan book grew 51.17% supported by organic
growth, outperforming the industry growth of 21.76% for
the same period.
Background & History
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SRG HOUSING FINANCE LIMITED
Relevant Parties
Lead Manager Aryaman Financial Services Limited
Merchant Banker Aryaman Financial Services Limited
Underwriter
Aryaman Financial Services Limited
ISJ Securities Private Limited
Market Maker ISJ Securities Private Limited
Registrar Sharex Dynamic (I) Private Limited
At present, the company sources fund for its business at a
higher rate of 14.5% from State Bank of India, primarily
through CC facility. Once the company gets listed on the BSE‐
SME, its net owned funds are expected to cross Rs 10 crore
from the current level of Rs 4.89 crores. NHB specifies the
minimum of net owned funds required to be achieved by a
housing finance company to be Rs 10 crore on or before
March 31, 2014, to can raise capital from NHB at cheaper
rates (in the range of 8‐9%). This will optimize the funding
costs for SRG housing finance by FY14. As per the
management, the company can reduce its cost of borrowing
by at least 4 %‐5 % if they borrow from the NHB, which in
turn will boost net interest margins by at least 2‐3%.
What drives the company for getting listed?
Enhancing the status and financial standing of the
company.
Creating a market for the company's shares and
unlocking value.
Business growth and nationwide presence.
Gaining access to additional fund raising in the future by
means of new issues of shares or debentures or other
securities.
Increasing public awareness and public interest in the
company and its products.
Optimizing the funding costs FY14 onwards.
Company’s Expectations from Listing
Underwriter Aryaman
Financial Services Limited
ISJ Securities Private Limited
No. of Shares Underwritten
13,02,000 17,04,000
Amount Underwritten (Rs. In Lakhs)
260.40 340.80
% Underwritten 37.16% 48.63%
Underwriting Commitment
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SRG HOUSING FINANCE LIMITED
Financial Data
Rs. (lakhs) FY10 FY11 FY12
Revenue 84.55 90.67 126.71
Growth (%) 42.82 7.24 39.75
EBITDA 53.72 60.33 88.31
EBITDA Margin (%) 63.54 66.54 69.69
Net Profit 15.94 16.17 25.67
NP Margin (%) 18.85 17.83 20.26
ROANW 6.24 5.70 6.47
ROA 3.67 2.94 3.51
NI margin (%) 13.60 10.97 11.20
Cost of funds (%) 15.31 12.16 14.32
EPS (adjusted) 0.45 0.46 0.68
Revenue grew by 39.75% to Rs. 126.71 lakhs from Rs.
90.67 lakhs for the financial year ending March
2012.
Higher revenue growth offset the rise in financial and
employee costs.
Net Interest margin moved up from 10.97% to 11.20%
over the fiscal.
Net Profit Margin has improved in FY12 at 20.26% as
against 17.83% recorded a year ago.
Net Profit increased by Rs. 9.50 lakhs or 58.75% from Rs.
16.17 lakhs in Fiscal 2011 to Rs. 25.67 lakhs in Fiscal
2012.
The growth of the Indian economy and the resultant rise in the per capita income are stepping up the pace of urbanization.
This, along with the increasing finance penetration, has resulted in a growth in demand for housing in the past few years.
The ratio of home loans to gross domestic product in India is a meagre 9% vs. more than 80% in developed countries like the
US and the UK. This underscores the need for boosting the housing finance industry so as to enable a greater portion of the
population to access one of the basic needs of existence, i.e. housing.
Housing Finance Companies (HFCs) play an important role in Indian financial market. India’s housing finance industry mainly
comprises banks and HFCs, and to a certain limited extent, smaller institutions such as community‐based organizations, self‐
help groups, etc. The National Housing Bank (NHB) operates as the principal agency for promoting, regulating and providing
financial and other support to HFCs, while banks and NBFCs are managed and regulated by the Reserve Bank of India (RBI).
At present, around fifty‐four companies have been granted certificates of registration by NHB to act as HFCs.
Though providing home loans is the main operation area for HFCs but they also offer loans against property, project loans,
lease rental discounts and personal loans. HFCs primarily depend on funding sources from banks and financial institutions,
financing from NHB, borrowing through bonds and debentures, commercial paper, and fixed deposits from public, besides
their own equity and reserves. In the recent time, growing competition in the market has led to the introduction of new
mortgage products, such as variable interest rate loans, loan for repairs and renovation etc. HFCs bear two broader kind of
risks‐ a) Business risk which comprises operating environment, ownership structure, management strategy, competitive
position and government regulations and b) Financial risk which comprises asset quality, liquidity, profitability and capital
adequacy ratio.
The urbanization scenario in the country raises serious concerns. By 2030 it is estimated that 600 million of the country's
population will be living in cities. Infrastructure gaps in cities, particularly in respect of housing and basic services will
continue to engage the city planners, policymakers, financers and the community at large.
Key regulatory changes by Government for Housing & Housing Finance Companies –
Removal of prepayment penalty
Restriction on Loan to Value (LTV) ratio
Industry Analysis
Financial Snapshot
Provisioning on teaser rate loans
Provisioning on standard assets
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SRG HOUSING FINANCE LIMITED
Key Drivers of the Industry
Key Drivers of
the Industry
Population growth
backed by favourable
demographics Shortage of housing projects
Increasing Urbanization
Increasing Nuclearisation
Rising Affordability
Increasing penetration of
housing finance
Government’s incentives towards the
sector
Michael Porter’s “Five Forces” Analysis
Rivalry among Existing Competitors
Competitors like large HFCs and SCBs have greater brand recognition and due to longer operating history enjoy large customer base in and outside India.
Threats of New Entrants
With the rise in number of HFCs and more SCBs penetrating into the industry, market share may come down.
Threats of Substitutes
Customers can approach the community based organization and self‐help groups as they follow less stringent policies.
Bargaining Power
of Supplier
As the Company lends to the non‐salaried persons, which involves high risk and thus it gives more power to the supplier to bargain with them.
Bargaining Power
of Customers
Face to face interaction with the customers for procuring the loan products.
As the industry is highly competitive, thus more stipulation can lead the customers to select the competitors.
High
High
High
Medium
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SRG HOUSING FINANCE LIMITED
Branding ‐ The Company is a well known brand in Rajasthan and is operational since 1999. It has a proven track record
with approximately 0.50 million customers as on March 31, 2012 (including the customer base of group companies).
Established track record, management expertise and Promoter support have established a strong brand name for the
company in the markets.
Corporate Governance ‐ The Company emphasizes on the Corporate Governance for establishing and maintaining
integrity, transparency, accountability and fairness. It has complied with the corporate governance code in accordance
with SME Equity Listing Agreement. Apart from appointing independent directors in the Board, separate committees have
been formed like, an audit committee, a remuneration committee and a shareholders’ grievance committee. It
implements the principles of Corporate Governance in all its dealings and activities which help maintain a cooperative,
competent, positive, harmonious and productive work atmosphere and business organization. This also protects the long
term interests of the stakeholders.
Corporate Social Responsibility (CSR) ‐ The company and its employees have taken up CSR assignments to take up social
causes with a view to serve the society. The real work in CSR extends beyond the statutory obligations and sees company
and its people voluntarily taking up programmes and initiatives to improve the quality of life of the local community and
also the society at large.
Promoter Directors of the company actively participate in the various Charity activities through Akhil Bhartiya Pulak Jan
Chetna Manch, Udaipur Mahila and Bal Vikas Samittii (Sanjiwani vikalang Chatrawas), Lions club’s various charitable
programmes etc.
The company believes in the importance of providing a healthy environment. It provides a high standard of Housekeeping
and Transparency.
Expansion Plan ‐ The Company intends to expand its operations across new regions in a phased manner in order to
increase its market share in the housing finance business by tapping underserved segments of the Indian economy. It
intends to venture into newer territories through Satellite Model with clear focus on direct customer contact and the
key target markets would be tier‐2 and tier‐3 cities. It also aims to deepen penetration in Rajasthan and expand
operations in the states of Maharashtra and Gujarat.
Management Overview ‐ Company believes in achieving excellence through a positive and proactive approach.
With the growing demand for housing loans especially in urban areas, the company aims to grow both geographically and
financially. The company intends to grow the loan book, income and profits through (a) Increasing Net Owned Funds (b)
Expanding Network and Connectivity (c) Maintaining strong asset quality through disciplined risk management (d)
Reducing funding costs (e) Optimizing cost of operations, amongst others.
Marketing ‐ Company’s marketing strategy is focused on direct and localized advertising through word of mouth
referrals. Most of the customers are either “walk‐in” borrowers or referred by existing borrowers of the company. In
order to reduce the possibility of miss‐selling a loan to a customer and hence reducing potential for future disputes,
company follows face to face meetings mandatorily.
B2C ‐ As the business consists primarily of lending housing loans to customers for fulfilling their housing
requirements, the company maintains a good customer contact. The company has a broad customer base
which is a mix of both the salaried and non‐salaried class. Loans to salaried and non‐ salaried borrowers
constituted 13.41% and 86.59%, respectively, as at March 31, 2012. Apart from this, good branch
network of lenders, increasing acceptability of loans by customers also helps the company to maintain
higher B2C co‐ordination.
Business Analysis
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SRG HOUSING FINANCE LIMITED
HR Practices ‐ The Company has seventeen employees at their Head Office and do not have any contract labour.
Among these seventeen personnel, the company has six directors, comprising of M. D. and three independent
directors, four senior managers and five executives and two semi‐skilled staffs. The company expects that human
resource and employee recruitment activities will rise along with the expansion of the company.
As per management, the Company has already approached few people from the banking sector who are VRS opts or
retired from banks to be associated with us at senior position so that we can run the organization more professionally .
In coming months these key professionals will join in.
Products ‐ The Company has a variety of home loan products that are customized to the requirements of the
borrowers, which can be classified as (i) Individual Home Loans (ii) Loans against Property. All the loans are backed by a
first lien on the respective underlying properties and loan amounts range from Rs. 50,000 to Rs. 100,00,000.
Products
Individual Home
Loans
Loan against
Property
Specialty Loans
Home Revision
Loans
Sparsh Home Loans
Saral Plot Loans
Home Loans for
Self Employed
NRI Housing Loans
Wealth Loans
New Avenue Loans
The company has five individual home loan products –
Sparsh Home Loans ‐ Offered to Individuals and Corporate Bodies who wish for construction or purchase of a property.
Home Revision Loans ‐ Offered to customers who wish to repair, renovate or extend the existing accommodation.
Saral Plot Loans ‐ Offered to the Salaried and the Self‐employed for outright purchase of plots for the construction of a
house.
Specialty Loans ‐ Offered for construction (including extensions and additions to existing property) on land owned
by borrower’s parents.
Home Loan for Self Employed ‐ This product has been developed to cater to the large potential segment of self
employed individuals.
The company has three products under loans against property –
NRI Housing Loan ‐ Offered to NRI’s for construction and purchase of Residential properties.
Wealth Loan ‐ Offered to Salaried or against mortgage of immovable property for such purposes as may be desired by
the borrower.
New Avenue Loan ‐ Loans for purchase or construction of non‐residential and commercial property.
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SRG HOUSING FINANCE LIMITED
SWOT Analysis
Too much dependence on top management.
Geographical diversification risk.
Changes in Indian economic or financial conditions.
Client Relationships / Fluctuations in customer base.
Fluctuating interest rate scenario.
Increasing competition in the industry.
Change in Laws and Regulations governing HFC Industry.
Recruitment and Retention of employees.
Improper due diligence of the client could severely impact nonperforming assets (NPAs).
Key Risks
External
Strengths
Direct customer contact.
Recognized brand in Rajasthan with well‐established track record.
Strong understanding of the local
mortgage market.
Strong collection and recovery network. Robust risk management systems.
Diversified customer base.
Weakness
Limited funding source as compared to
bigger HFCs.
Too much dependence on banks and
NHBs.
Highly sensitive to interest rate. High risks of defaults on borrowers.
Opportunities
Increasing Urbanization. Rising Affordability. Increasing penetration of housing
finance.
Net owned funds to increase on capital infusion from issue proceeds.
Threats
Slowdown in economic growth.
Fluctuations in interest rates. Changes in regulatory environment.
In
ternal
Favorable Unfavorable
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SRG HOUSING FINANCE LIMITED
As a lending institution, the company’s operations are exposed to risks that are specific to the industry within which they
operate. The company has a risk management policy for identifying, monitoring, controlling and reporting various risks like
Systematic risk, Credit Risk, Counterparty risk, operational risk and Legal risks.
As a matter of disclosure, the company does not have any exposure to foreign exchange risks as none of the borrowings are
denominated in foreign currencies.
To mitigate the above mentioned risks the company has implemented the following policies:
Underwriting Standards ‐ NHB (National housing bank) has framed certain guidelines for underwriting
process which help to curtail the frauds that occur during the loan sanctioning process. The company has
implemented the same guidelines.
Risk categorization ‐ The Company has segregated its loan portfolio as per the risk weightage assigned to
each of their borrowers. Depending upon the risk weightage, credit appraisal and recovery mechanism (like
tenure of loan, amount of loan) can be calculated.
Review standards ‐ The Company reviews all the risk mitigation policy and standards on a quarterly basis and
NHB conducts its audit on a yearly basis.
Financial Reporting –
Audits ‐ The Company undergoes 3 types of audit on a periodic basis, viz, Internal, statutory and NHB
audit.
Regulatory reports ‐ The Company prepares regulatory reports on a quarterly and annual basis.
Internal portfolio ‐ The Company relies on an internal reporting mechanism to analyze its
performance which covers critical divisions such as the marketing, sales and the recovery.
The company has framed its own Credit and Position Limits for Counter party exposures ‐
Credit limits and Position concentration ‐ The credit limits has been defined by the company for the
individual and the group borrower to a certain minimum and maximum exposure of loans to be given. It is a
type of cap on the loan amount the company sticks to for a particular borrower. In case of position
concentration, the company also observes the same cap on the loan amount if a borrower goes for multiple
housing project loans under various company names. To be more specific, if the same person is on the board
of all these multiple company and applies for multiple housing project loan. In such scenario, to avoid
position concentration on a single entity, SRG housing finance will consider to sanction loan as per the pre‐
defined credit limit.
Moving Forward: Once the company meets the criterion of having net owned funds of Rs 10 crore or above, it will be able to
raise long term sources of funds at very competitive rates for business growth while maintaining prudent capital structure
and effectively manage asset liability mismatch (ALM).
Following are the key options the company will opt for having an effective asset liability mismatch management ‐
The Company can do debt securitization and raise funds for a longer period
The Company can avail re‐finance facility from the NHB
The Company can raise funds from secured and un‐secured debentures (can also avail a co‐guarantee from NHB)
Company can come up with FPO to raise funds.
Risk Mitigation Strategies
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SRG HOUSING FINANCE LIMITED
New Initiatives
The core growth strategy envisages an increase in the net owned funds. This in turn will enable the company to
avail credit facilities from NHB and other financial institutions at relatively cheaper rate of interest.
In addition to achieving growth, the company maintains strong asset quality appropriate to the loan portfolio
composition. This is substantiated by fall in gross and net NPAs from 6.32% and 5.25% in FY11 to 3.81% and
2.56%, respectively in FY12.
The company can diversify the sources of funding and tap into alternative sources such as multi‐lateral agencies
and rated long term and short term listed debt instruments. It enables the company to reduce the risk of lender
concentration and optimize the funding costs. The company can reduce its operating costs via efficient
implementation and optimal utilization of resources. It also leverages on existing fixed costs while
simultaneously increasing the business and manpower productivity Client Relationships / Fluctuations in
customer base.
The company has a broad‐based customer mix and is not too much dependent on the salaried class which
happens to be a highly competitive market segment. It rather follows a niche marketing strategy and focuses on
the non‐salaried borrower base which is relatively less penetrated.
The promoters are in the local (Rajasthan) financial industry since 1985 and it is a registered NBFC since 1999.
The company has its own network of associates companies with more than 50,000 customer base and 15
branches of SRG group companies. This gives the company an easy access to the existing client base of its group
companies for strengthening its business.
The company also has the advantage of tapping the rural market. SRG Group utilizes the networking of 800+
agents working under its sister concern Hriday Insurance consultant (P) Limited. All these agents are also
affiliated to rural NGOs and help in pulling rural customers as they are well connected at the ground level.
Growth Drivers
Expanding network and
connectivity
Broaden the market base
Company intends to expand its operations across new regions in a
phased manner and aims to raise the market share. It targets to
expand its coverage in more than 40 locations in next 2 years.
Company intends to target tier‐2 and tier‐3 cities and plans to
venture into new territory through satellite model. It targets to
penetrate in Maharashtra and Gujarat along with deeper
penetration in Rajasthan.
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SRG HOUSING FINANCE LIMITED
Financial Analysis
5559
8591
127
50
70
90
110
130
2008 2009 2010 2011 2012Interest In
come ( Rs in Lakhs)
Interest Income
42 43
59 60
82
10.84%
11.64%
13.60%
10.97%
11.20%
2%
4%
6%
8%
10%
12%
14%
35.00
45.00
55.00
65.00
75.00
85.00
2008 2009 2010 2011 2012
Net Interest M
argin (%)
Net Interest In
come (Rs in Lakhs)
Net Interest Income Net Interest Margin (%)
In FY12, the company reported interest income of Rs.
126.71 lakh reflecting a growth of 39.75% on Y‐o‐Y basis.
Though the interest income has been witnessing a rising
trend over the last 5 years, the pace of growth has
varied considerably, given their high sensitivity to
economic growth, inflation and interest rate conditions.
The interest income earned in FY12 remained highest
since FY08 when it was reported to be Rs. 55.23 lakhs.
This considerable rise in the interest income has been
driven by rise in interest income from both Individual
Home Loans and Loans against Property. The interest
income from Individual Home Loans increased by Rs.
29.99 lakhs and that from Loans against Property
increased by Rs. 6.41 lakhs in FY12 as against the previous fiscal. Their outstanding loan portfolio grew at a CAGR of 24.13%
from Rs 318.89 lakhs as of March 31, 2008 to Rs 757.13 lakhs as of March 31, 2012.
The Net Interest Income of the company has grown
36.06% Y‐o‐Y from Rs 60.29 lakhs in FY11 to Rs 82.03
lakhs in FY12. Over the last five years, the growth in the
Net Interest Income has been capped as the interest
expenses incurred by the company have grown at a
faster pace than the interest income. This can be
attributed to the fact that the company borrows from
SBI at floating rates while offers loans to the borrowers
at fixed rates. Any rise in interest rates immediately
pushes its cost of funds up while it takes longer time for
the company to pass on the burden to the borrowers.
Interest Income at its peak
Net Interest Income and Net Interest Margin
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SRG HOUSING FINANCE LIMITED
21%
19%
22%
19%20%
8%
14%15%
12%
14%
13%
5%
7%
7%
6%
0%
2%
4%
6%
8%
10%
12%
14%
6%
10%
14%
18%
22%
2008 2009 2010 2011 2012
Spread
(%)
Yield & Cost of Funds (%
)
Yield (%) Cost of Funds (%) Spread (%)
The Yield on the company’s advances has grown from
19.04% in FY11 to 20.15% in FY12. But, the cost of funds
has grown at a faster pace from 12.16% in FY11 to
14.32% in FY12, thus pushing the Spread down to 5.82%
in FY12 from 6.88% in the previous fiscal. During the first
half of 2010‐11, despite the fall in yields, the company
witnessed an improvement in its spread. This is because
the cost of funds declined simultaneously following
renegotiation of interest rates on loans contracted
earlier (at higher rates) and mobilization of fresh
borrowings at lower rates of interest.
The robust risk management systems and processes across all areas of Operations, namely loan origination, credit
appraisal, loan disbursement, and collection and recovery have helped the company achieve low levels of Gross NPAs and
Net NPAs. In FY12, the Gross NPAs stood at Rs 28.83 lakhs as against Rs 31.64 lakhs in FY11, reflecting a decline of 8.88%
on Y‐o‐Y basis. Despite the increase in Provisions for NPAs, FY12 witnessed a decline of 26.24% (Y‐o‐Y) in Net NPAs to Rs
19.17 lakhs from Rs 25.99 lakhs in FY11. As at March 31, 2012, the Gross NPA was 3.81% as a percentage of Gross Loan
Portfolio, lower than 6.32% seen in FY11. Net NPA was 2.56% as a percentage of Net Loan Portfolio, lower than 5.25% seen
in FY11.
Cash flow from Operating activities ‐ In fiscal 2012, the company had negative cash flow from operating activities
amounting to Rs.227.62 Lakhs due to substantial rise in loans and advances and creditors and other liabilities. In the
last two fiscal also, the company had negative cash flow due to the same reason. However, in 2009, cash flow from
operating activities was positive on account of substantial decrease in loans and advances.
Cash flow from Investing activities ‐ The Company had negative cash flow from Investing Activities amounting to
Rs. 0.90 Lakhs due to expenditure incurred towards purchase of fixed assets and other Non‐Current Assets.
Barring FY10, the company incurred similar negative cash flows worth of Rs.1.28 lakhs, Rs.2.91 lakhs and Rs.17.58
lakhs respectively in FY11, FY09 and FY08 due to expenditure incurred for purchase of fixed assets. However, in
fiscal 2010, the company’s cash flow from investing activities was nil.
Cash flow from Financing activities ‐ In the last fiscal, the company had a positive cash flow from Financing
Activities amounting to Rs.231.81 Lakhs, primarily on account of proceeds from issue of share capital and share
premium, and an increase in Secured loans. In the fiscal year 2011, the cash flow was positive due to the same
reason and it stood at Rs.77.34 lakhs. In fiscal 2009, the cash flow from financing activities stood negative at
Rs.10.02 lakhs due to significant decrease in secured loans which however rose to Rs.115.61 lakhs in fiscal 2010 due
to significant rise in secured loans.
Increase in Cost of Funds pushed the Spread Down
NPA Analysis
Cash Flow Analysis
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SRG HOUSING FINANCE LIMITED
6.78
14.64
18.76
12.91
19.2
19.81
7.9
5
8
11
14
17
20
50.00
70.00
90.00
110.00
130.00
150.00
<= 2 >2 ‐<= 5
>5 ‐<= 10
>10 ‐<= 15
>15 ‐<= 25
>25 ‐<= 50
>50 ‐<= 100
% of loan
outstanding
Amount (in Rs. Lacs)
Amount % of loan O/s
(Rs.in Rs. Lacs)
The segmentation of ticket size data suggests that
company’s preference is towards small ticket loans as
maximum number of outstanding loans, around 36% of
the total” are in “upto Rs 2 lakhs category”. The total
outstanding loan for the FY12 stands at Rs. 7.57 crore
which is constituted by 124 loans. The category “Above
Rs 25 lakhs to 50 lakhs” contributes the maximum
towards the total outstanding loan however number of
loans is only 3. The big ticket home loan size housing
finance market is primarily dominated by bigger players.
For SRG Finance, there is only 1 loan in “Above Rs 50
lakhs to 1 crore” category suggesting company’s
preference towards affordable housing and no proper
presence in luxury segment, which is primarily dominated by bigger players.
Segmentation of Ticket Size
Total Revenue Net Profit Book Value
(in Rs. Cr.) (in Rs. Cr.) Per Share
Can Fin Homes Ltd 286.18 49.02 14.3 4.3 23.9 169.6
GIC Housing Finance Ltd 436.18 59.04 26.7 7.8 11 92.3
Gruh Housing Finance Ltd 513.98 120.34 34.2 21.7 32.1 108.7
LIC Housing Finance Ltd 6215.12 914.23 25.8 12.9 18.1 112.6
Sahara Housing Finance Ltd 20.1 2.22 9.4 28.3 3.2 39.1
SRG Housing Finance Ltd 1.27 0.26 5.22 17.54* 1.14 16.17
Peer Comparison
Peers RONW (%) P/E Ratio# EPS (in Rs.)
2469.68 306.41 19.7 6.6
Source: Capitaline Database and Company DRHP
#P/E based on closing price of June 4, 2012 ; *P/E based on Basic EPS as at March 31, 2012
27.9 129.4
26.2 173.6
Housing Development
Finance Corporation Ltd17354.28 4122.62 21.7 22.9
Dewan Housing Finance
Corporation Ltd
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SRG HOUSING FINANCE LIMITED
The Management is focused on expanding its business beyond Rajasthan to cities like Ahmadabad and Mumbai and
increasing the loan portfolio by raising the capital and borrowings from financial institutions like NHB.
During FY2011‐12, SRG Housing Finance’ loan book grew 51.17% supported by organic growth, outperforming the industry
growth of 21.76% for the same period. SRG Housing Finance, with its strong understanding of the local mortgage market (in
Rajasthan) and supportive in‐house systems and risk mitigation processes, is well positioned to tap the highly
underpenetrated state mortgage market (especially self employed borrowers).
The diversified income segment throughout Rajasthan and a strong collection and recovery network has helped it maintain
good asset quality (gross NPA at 3.8% as of FY12, as against SCB’s comfort level of upto 5%). With increased low cost funding
opportunities and low loan‐to‐cost ratio of 10.9% as of FY12 will support the company’s loan growth in the coming years.
Management Outlook
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SRG HOUSING FINANCE LIMITED
Financial Summary
2012 2011 2010 2009 2008
491.32 305.65 264.47 248.53 240.51
305.10 225.10 200.10 200.10 200.10
186.22 80.55 64.37 48.43 40.41
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
374.42 293.15 236.02 120.40 137.37
347.86 276.05 223.71 108.10 118.12
0.00 0.00 0.00 0.00 0.00
2.10 4.22 2.31 2.65 12.18
24.46 12.88 10.00 9.65 7.07
865.74 598.80 500.49 368.93 377.88
28.45 30.97 33.50 38.31 41.73
11.74 14.42 17.17 22.54 26.90
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
1.66 1.55 1.33 0.77 0.17
0.00 0.00 0.00 0.00 0.00
15.05 15.00 15.00 15.00 15.00
837.29 567.39 466.99 330.62 336.15
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
757.13 500.82 451.64 318.66 318.89
56.08 52.78 9.27 7.67 10.76
24.08 14.23 6.08 4.29 6.50
0.00 0.00 0.00 0.00 0.00
865.74 598.36 500.49 368.93 377.88
ParticularsAs at March 31
Statement of Assets And Liabilities (Rs. in Lakhs)
I. Equity and Liabilities
(1) Shareholder's Funds
(a) Share Capital
(b) Reserves and Surplus
(c) Money received against share warrants
(2) Share application money pending allotment
(d) Long Term Provisions
(4) Current Liabilities
(a) Short Term Borrowings
(b) Trade Payables
(3) Non‐Current Liabilities
(a) Long Term Borrowings
(b) Deferred Tax Liabil ities (Net)
(c) Other Long Term l iabil ities
(1) Non‐Current Assets
(a) Fixed Assets
(i) Tangible Assets
(i i) Intangible Assets
(c) Other Current Liabil ities
(d) Short Term Provisions
Total (1+2+3+4)
II. Assets
(e) Other Non‐Current Assets
(2) Current Assets
(a) Current Investments
(e) Short‐Term Loans and Advances
(ii i) Capital Work‐in‐Progress
(iv) Intangible Assets under Development
(b) Non‐Current Investments
(c) Deferred Tax Assets (Net)
(d) Long Term Loans and Advances
(f) Other Current Assets
Total (1+2)
(b) Inventories
(c) Trade Receivables (Housing Finance Loans ‐ Gross)
(d) Cash and Cash Equivalents
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SRG HOUSING FINANCE LIMITED
2012 2011 2010 2009 2008
126.60 89.60 84.08 59.2 54.240.11 1.07 0.47 0.00 0.99
126.71 90.67 84.55 59.20 55.23
25.02 21.68 17.16 11.42 10.0447.35 33.41 26.51 16.73 13.953.53 4.03 5.38 7.27 3.816.64 2.18 (0.69) 2.61 0.796.74 6.48 14.36 9.21 11.07
89.28 67.78 62.72 47.24 39.6637.43 22.89 21.83 11.96 15.570.00 0.00 0.00 0.00 0.0037.43 22.89 21.83 11.96 15.570.00 0.00 0.00 0.00 0.00
37.43 22.89 21.83 11.96 15.57
11.88 6.94 6.25 5.2 5.23(0.12) (0.22) (0.56) (0.95) (0.15)0.00 0.00 0.20 (0.32) 0.0625.67 16.17 15.94 8.03 10.430.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00
25.67 16.17 15.94 8.03 10.436.50 3.75 3.25 3.00 3.50
19.17 12.42 12.69 5.03 6.93Amount to be transferred to P&L Account
ParticularsAs at March 31
I. Revenue from Housing Finance Activity
STATEMENT OF PROFIT AND LOSS ACCOUNT (Rs. in Lakhs)
II. Other IncomeIII. Total Revenue (I +II)IV. Expenses:Employee Benefit ExpenseInterest (Financial) CostsDepreciation and Amortization ExpenseProvision for NPAOther ExpensesIV. Total ExpensesV. Profit Before Exceptional and Extraordinary
VI. Exceptional ItemsVII. Profit Before Extraordinary Items and Tax
VIII. Extraordinary ItemsIX. Profit before tax (VII - VIII)X. Tax Expense:(1) Less: Current Tax
XIV. Profit/(Loss) from Discontinuing operations
XV. Profit/(Loss) for the period (XI + XIV)Less: Transfer to Special Reserve
(2) Less: Deferred Tax(3) Less: Short / Excess Provision of Earlier YearsXI. Profit (Loss) from the period from continuing operationsXII. Profit/(Loss) from discontinuing operationsXIII. Tax expense of discounting operations
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SRG HOUSING FINANCE LIMITED
2012 2011 2010 2009 2008
37.43 22.89 21.83 11.96 15.57
3.53 4.03 5.38 7.27 3.81
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
40.96 26.92 27.21 19.23 19.38
(266.16) (57.33) (134.77) 2.44 (112.80)
9.46 4.79 0.01 (6.95) 12.47
(256.70) (52.54) (134.76) (4.51) (100.33)
(11.88) (6.94) (6.46) (4.88) (5.31)
(227.62) (32.56) (114.01) 9.84 (86.26)
(0.85) (1.28) 0.00 (2.91) (17.58)
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
(0.05) 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
(0.90) (1.28) 0.00 (2.91) (17.58)
160.00 25.00 0.00 0.00 61.50
71.81 52.34 115.61 (10.02) (99.65)
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
231.81 77.34 115.61 (10.02) (38.15)
3.29 43.50 1.60 (3.09) (141.99)
52.78 9.27 7.67 10.76 152.75
56.08 52.78 9.27 7.67 10.76
3.30 43.51 1.60 (3.09) (141.99)
ParticularsAs at March 31
Net Profit Before Tax
A ) Cash Flow From Operating Activities
Adjustment for :
Depreciation
Provision for Diminution in Value of Investments
(Profit)/ Loss on Sale of Fixed Assets
(Profit)/ Loss on Sale of Investments
Dividend Received
Operating Profit before Working Capital
Loan and Advances
Creditors and Other Liabil ities
Cash Generated from Operations
Adjustment for :‐
Dividends Received
Direct Taxes Paid
Net cash from /(used in) Operating
B) Cash Flow from Investing Activities
Purchase of Fixed Assets
Sale of Fixed Assets
Cash Flow Statement
Dividends paid
Net cash from/(used in) financing activities (C)
Cash and cash equivalents at end of year (E)
Net (Decrease)/Increase in cash and cash equivalent (D‐E)
Net (Decrease)/Increase in Cash and Cash Equivalents (A+B+C)
Cash and cash equivalents at beginnings of year (D)
Net cash from/(used in) Investing activities (B)
Proceeds From Issue of Share Capital + Premium
Increase in Secure and Unsecured loans
C) Cash Flow from Financing Activities
Increase in Housing loans
Purchase of Investments
Other Non‐Current Assets
Deferred Tax Assets
Sale of Investments
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SRG HOUSING FINANCE LIMITED
2012 2011 2010 2009 2008
126.71 90.67 84.55 59.20 55.23
88.31 60.33 53.72 35.96 33.33
84.78 56.30 48.34 28.69 29.52
37.43 22.89 21.83 11.96 15.57
25.67 16.17 15.94 8.03 10.43
69.69 66.54 63.54 60.74 60.35
66.91 62.09 57.17 48.46 53.45
20.26 17.83 18.85 13.56 18.88
10/‐ 10/‐ 10/‐ 10/‐ 10/‐
1.14 0.81 0.80 0.40 0.75
1.14 0.81 0.80 0.40 0.75
732.27 549.65 434.71 373.41 385.51
628.98 476.24 385.15 318.78 263.27
311.96 249.88 165.91 113.11 167.95
396.88 283.62 255.45 244.22 204.79
6.47 5.70 6.24 3.29 5.09
3.51 2.94 3.67 2.15 2.71
126.71 90.67 84.54 59.20 55.22
44.68 30.38 25.40 15.73 13.43
82.03 60.29 59.14 43.47 41.79
11.20 10.97 13.60 11.64 10.84
20.15 19.04 21.95 18.57 20.97
14.32 12.16 15.31 13.91 8.00
5.82 6.88 6.64 4.66 12.98
0.68 0.46 0.45 0.23 0.36
37.83 35.27 35.27 35.27 29.2
2012 2011 2010 2009 2008
28.83 31.64 11.41 7.87 4.74
9.66 5.65 3.13 4.45 1.84
19.17 25.99 8.28 3.42 2.90
757.12 500.83 451.64 318.66 318.89
747.46 495.18 448.51 314.21 317.05
3.81 6.32 2.53 2.47 1.49
2.56 5.25 1.85 1.09 0.91
33.51 17.86 27.43 56.54 38.82
Diluted earnings /(loss) per share (Dil. EPS)
Weighted Avg no. of equity shares
Adjusted EPS
ParticularsAs at March 31
Face Value per Equity share
Statement of Accounting Ratios
Basic earnings /(loss) per share (Basic EPS)
Net NPAs
Gross Loan Portfolio
Net Loan Portfolio
Average Total Assets
Average Net Worth
ROANW (Net profit to average net worth (%)
ROA (Net profit to average total assets (%)
Spread (%)
Interest Income
Interest Expenses
Net Interest Income
Net Interest Margin (%)
Yield (%)
Cost of Funds (%)
As at March 31
Statement of Non‐ Performing Assets
Gross NPAs/Gross Loan portfolio (%)
Net NPAs / Net Loan Portfolio (%)
Total Provisions as a percentage of gross NPAs (%)
Total Income
EBIDTA
EBIT
Net Profit
PBT
EBIDTA Margin(%)
EBIT Margin (%)
Net Profit Margin (%)
Average Interest‐earning assets
Average interest‐bearing l iabil ities
Particulars (Rs in Lakhs, except percentages)
Gross NPAs
Provisions for NPAs
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SRG HOUSING FINANCE LIMITED
Contact Details
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