Expect better margins in FY17: Satin Creditcare

Satin Creditcare has raised money to last for 18-24 months. Company's tier I capital goes up to 22 percent with this fund infusion."We have a very robust growth based on this tier I capital. So, our tier I capital with this infusion goes up to about 22 percent", HP Singh, Founder and MD of Satin Credit Care told CNBC-TV18.Talking about margins, he mentioned, "There will be slight improvements. Under this capital infusion, definitely we will look at our net interest margins (NIMs) rising".Below is the verbatim transcript of HP Singh's interview to Latha Venkatesh and Anuj Singhal on CNBC-TV18.Anuj: You have raised Rs 250 crore, what is your capital looking like now and is this sufficient for growth, for how long will this capital be sufficient and when do you think you will need to go for next round of capital raising?A: For us this capital probably will last for about 18-24 months looking forward. We have a very robust growth based on this tier I capital. So, our tier I capital with this infusion goes up to about 22 percent and our capital adequacy rises now. So, this will probably be leveraged for us in the next few months where we can get leverage in terms of raising more debt. We will be able to look at growth in newer areas as well as looking at growth for basically wherever we are present and increasing our loan book.Latha: You have got a goodish bit of non-convertible debentures (NCDs) on your book, where are they maturing, when will you be able to chip in that source of money?A: NCDs is a regular process for us so it is a thing which is a kind of cycle which goes on. Technically, it doesn't affect our assets under management (AUM) because this is a churn which will happen. So fresher NCDs will be coming in, older ones will be retiring. So, it doesn't affect our AUM technically.Latha: What is your assets under management growth that you are expecting, can you maintain this scorching pace of 75 percent?A: Not exactly 75 percent, I think we have given a guidance of about 60 percent for this year and with this capital infusion and looking at the way we are progressing well by opening up more branches across the states where we do it, I think we will be able to do justice to this growth and we definitely will be achieving our targets for this growth as per our guidance.Anuj: You have been raising market share a lot, from FY12 1.9 percent to 6.1 percent in FY16. From here on do you have any targets in mind?A: Market share in terms of our dominant position in the northern markets?Latha: Yes.A: We will continue to keep on doing that and as we penetrate more deeper into the territories wherever we are performing -- Uttar Pradesh (UP) and Bihar being our major territories -- we will remain in a dominant position over there and the growth will possibly be streamlined according to what we have given our guidance for a 60 percent growth.Latha: How will margins look this year compared to last year?A: We will probably be on the same track as our operational expenditure (opex) ratio was there for the last year as such. There will be slight improvements, definitely yes.In terms of our profitability, we will again be on the same plan as what we have given our guidance. Under this capital infusion, it looks far more robust and we definitely will look at our net interest margins (NIMs) rising. We still have had an increase in our NIMs and I definitely think that is possible for the next two quarters as such.Latha: You are rated BBB+, some of your slightly larger or your other peers have A ratings, A+ for an SKS Microfinance, Equitas, Ujjivan Financial Services, do you see a rating upgrade for you anytime soon?A: We are definitely approaching the rating agencies now and with this capital infusion that was the only prima facie bottleneck that we are facing in terms of our rating upgrade. However, definitely we would possibly have a rating upgrade with this capital infusion and this will probably enhance our ratings.Latha: Then your cost of debentures could go down, is it?A: Definitely yes.