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Sammaan Capital Limited (SCL), formerly Indiabulls Housing Finance, reported strong financial results for H1 FY25, with a net worth of INR 20,000 crore, up INR 3,000 crore. The parent entity consolidated its position by acquiring a INR 5,500 crore legacy loan book, boosting capital adequacy to 26%. Sammaan Finserve, now focused on affordable housing finance, is poised for higher valuations in a growing sector. Improved asset quality, with SMA and NPA levels at record lows, reflects proactive provisioning of INR 4,500 crore. With stable credit costs and a robust capital base, SCL is well-positioned to drive growth in affordable housing finance.
Sammaan Capital Limited (SCL), formerly Indiabulls Housing Finance Limited, has posted impressive results for the first half of FY25. The company's net worth increased to about INR 20,000 crore as of September 30, 2024, reflecting a rise of INR 3,000 crore for the parent company. This growth is largely due to enhanced cash collections from its legacy loan portfolio, indicating a positive trend in its financial management. Advertisement
A significant development for Sammaan Capital is the acquisition of a INR 5,500 crore legacy loan book from its subsidiary, Sammaan Finserve Limited (SFL). This strategic move was executed at fair market value and was supported by reputable firms such as Deloitte and BDO. The transaction has allowed Sammaan Capital to consolidate its financial position, with the parent entity now holding the majority of the company's borrowings, which are around 95%. This structure has led to an increase in capital adequacy, which improved by 300 basis points to approximately 26%, well above the regulatory requirement of 15%.
The repositioning of Sammaan Finserve as an affordable housing financier marks another crucial step for the company. This change aims to unlock value in a sector that typically enjoys higher valuations, often exceeding four times the net worth of similar companies. With this shift, Sammaan Finserve is now better aligned with the growing demand for affordable housing finance, which is becoming increasingly important in the Indian market.
In terms of asset quality, Sammaan Capital has made notable progress. The company faced expectations of a one-time credit hit of around INR 6,000 crore but has provisioned INR 4,500 crore based on internal assessments and external valuations. This proactive approach has helped reduce the number of special mention accounts (SMA) and non-performing assets (NPAs), bringing these figures to their lowest levels in years. This improvement in asset quality is a positive sign for the company's future growth prospects.
Looking ahead, Sammaan Capital is well-positioned for continued operational success. The company expects its credit costs to remain stable at around 80 to 100 basis points per annum. With strong cash collections, a solid capital base, and an effective strategy for managing its legacy loans, Sammaan Capital is set to capitalise on opportunities in the affordable housing sector. This strategic focus not only strengthens the company's market position but also aims to create long-term value for its stakeholders.
In conclusion, Sammaan Capital's recent performance and strategic initiatives reflect a strong commitment to financial stability and growth. The shift towards affordable housing finance, combined with effective management of its legacy portfolio, positions the company favorably in a competitive market. As demand for affordable housing continues to rise, Sammaan Capital is poised to play a significant role in this sector while enhancing its overall financial health.
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