Arman Financial Services skyrockets 8% on strong Q3FY22 numbers

15 Feb 2022 , 02:45 PM

Arman Financial Services Ltd. (Arman), a Gujarat-based non-banking financial company (NBFC), with interests in microfinance, two-wheelers, and micro-enterprise (MSME) loans, announced its financial results for the quarter and nine months ended December 31, 2021. The company stock was in demand after the company displayed performance numbers that demonstrate a post-second wave turnaround phase for the company.

At around 2.48 PM, Arman Financial Services Ltd was trading at Rs798.10 per share up by Rs59.6 or 8.07% from its previous closing of Rs738.50 per share on the BSE. The scrip opened at Rs775.05 and has touched a high and low of Rs848.25 and Rs755.20 respectively.

Gross Total Income increased by 23% yoy to Rs58.7 crore and Net Total Income increased by 9% yoy to Rs33.5 crore in Q3FY22.

The increase in gross & net income was due to strong growth in the portfolio, the company said in a filing on Tuesday.

Profit after tax increased by 140% yoy to Rs7.0 crore aided by strong growth in portfolio and lower provisioning requirement due to better asset quality of the loans disbursed post COVID-19 since September 2020.

As on December 31, 2021, Company’s Assets Under Management (AUM) stood at Rs1,044.6 crore, higher by 45% yoy. Improvement in overall macro- economic environment and improved consumer sentiment led to higher AUM growth.

Disbursements picked up across all segments: Loan Disbursements during Q3FY22 stood at Rs296.5 crore, up by 63% yoy; and by 192% qoq. Shareholders’ equity stood at Rs202.12 crore as on December 31, 2021 (Book Value per Share is Rs238).

The company said it has comfortable leverage position as Debt-Equity Ratio as on December 31, 2021 was 4.35. Finance cost increased by 46% yoy to Rs25.2 crores in line with increase in disbursements and overall increase in the loan book. Operational costs increased by 37% to 17.3 crore as a result of expansion in MFI/MSME branches and recruitment of staff for the branch expansions. Further the increase is also due to the growth in the loan portfolio.

Loan Impairment cost for the quarter reduced to Rs6.6 crore. The Company prudently created extra provisions of Rs1.91 crores and took and aggressive write-offs of Rs6.4 crore. Cumulative Total Provisions stood at Rs64.0 crore as on December 31, 2021, covering 6.1% of the on-book AUM.

Consolidated GNPAstood at 5.00%; NNPA stood at 1.07% for December 21. Total operational branches as on December 31, 2021 stood at 262 (211 in MFI, 45 in MSME and 6 in 2W).

Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services said, “During the quarter, the overall economic environment and consumer sentiment remained positive despite the sharp increase in number of COVID cases due to the newly evolved Omicron variant. The economy has moved towards normalcy, which is quite visible from the uptick in tax collections, highway toll collections and power consumption etc. Moreover, the push given on the massive infrastructure projects during the Budget 2022-23 will give additional impetus to the consumer segment that we target by providing them vast employment opportunities.

The quarter gone by marks our significant achievement of crossing Rs1,000 crore AUM. This not only gives us a morale boost but is also testimony of our unwavering determination and robust business model. The disbursements during the quarter stood at Rs296 crore, up by 63% yoy and 192% qoq mainly due to the rebound in economic activities and significant improvement in the overall macro environment. While we focus on improving our disbursements, our foremost priority remains the quality of our loan book. Our stringent credit assessment screenings ensure that we only lend to customers with good credit history and no defaults in past.”