In conversation with Kalpesh Dave, Head of Corporate Planning and Strategy, Star Housing Finance Ltd
















Star HFL aims to double its network and increase its coverage to more than 100 districts in the next 3 years, assures Kalpesh Dave Head of Corporate Planning and Strategy, Star Housing Finance Ltd.





Star HFL reported 480% annual PAT growth for the first half of FY23, while quarterly growth was 60% for the second quarter of FY23. What factors were critical to your outstanding performance?


Star HFL posted a record disbursement (Rs 64.21 crore) for the H1 period ending September 2022. This performance is equivalent to the cumulative performance of the past 2 years. This helped strengthen interest and fee income, recording growth of 42% and 184% year-on-year. We were successful in raising equity (Rs 21.6 crore) during the period which provided an additional cushion to overall revenue. Our collection efficiency improved to 94% (OTRR), which further boosted revenue. This resulted in improved profitability over the period.



Star HFL’s loan book recently surpassed Rs 150 crore and is in line with your business plan to cross an AUM of Rs 500 crore. What is the growth in assets under management that you are targeting for H2 FY23 and FY24?


In our company update and earnings call, we have provided the key numbers that we are pursuing in this phase of growth. We would not like to give any guidance as a listed company but as a milestone we are looking to cross Rs 250 crore AUM at the end of March for the current financial year and hope to cross Rs 500 crore AUM in and around the middle of the next exercise. We are working on balance sheet liabilities, both on borrowings and on equity, to enable us to achieve the objectives we have set ourselves.



Currently, what is your average ticket size and how do you expect it to change over the next 3 years? Can you also tell us about your plans to expand your branch network?


In geographies close to rural areas, the average ticket size stands at Rs 6-8 lakh and in geographies close to city centers, the average note size stands at Rs 12-13 lakh. We estimate that the average ticket size in rural geographies is expected to remain below Rs 10 lakh over the next 3 years and those in city centers are expected to be below Rs 17 lakh over the next 3 years taking into account the inflation and the resulting price escalation in the residential sector. real estate space.


Star HFL through its points of presence covers 40 districts in its operational geographies. From now on, existing geographies are planned to penetrate deeper at taluka and village level and new geographies like UP and Haryana will be explored. Star HFL aims to double its network and expand its coverage to more than 100 districts over the next 3 years.



How are you leveraging technology, process automation and the wave of digital adoption? When do you plan to roll out “one-click” digital lending solutions in your target segment?


The current lending suite is replaced by a better lending platform (eSthanos Suite). This would capture data points across the different stages of loan processing and have seamless integration of all stages. Deployment of this system is expected to take place in the fourth quarter of the current fiscal year, which should help scale, optimize operating costs and maintain/enhance asset quality through encapsulation of various parameters throughout the connection phase to disbursement.


We believe our customer segment would be better understood with a mix of digital and physical interface. So, when we talk about one click digital loan, it will be first offered to our existing customers for their additional financing needs after their loans have been sufficiently reduced through repayment/prepayment/PMAY grants. This would be made available in Phase 2 of the suite’s current rollout.



What is your earnings outlook for the coming quarters?


Star HFL, being a publicly traded company, would not be able to provide guidance. But we have set a milestone by becoming a systemically important HFC (AUM of Rs 500 crore) within the next 4-6 quarters. This will begin to build a stable ROTA of 4-4.50%, leverage of 3-3.50x and resulting ROE of 22-25% on a sustainable basis.



























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