SAMMAANCAP — earnings call
The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.
Prepared remarks
Moderator · Conference Operator
MR. ARYAN SUMRA – MUFG Sammaan Capital Limited February 04, 2026
Ladies and gentlemen, good day, and welcome to Sammaan Capital Limited Q3 FY '26 Earnings Conference Call.
As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Aryan Sumra.
Thank you, and over to you, sir.
Thank you, sir.
We will now begin the question and answer session.
The first question is from the line of Amish Kanani from Knowise Investment Managers.
Amish Kanani
Congrats on the good numbers.
Sir, one question that keeps bothering us as an investor is that with the company being so very well capitalized post the preferential issue and we also intending to continue the asset-light model.
In one of the previous conference call, you did alluded to a possibility of using the capital for lending.
The question is, how do we look at our leverage post the transaction because we are very, very lowly leveraged.
And how are we planning to use, say, profits because in one of the earlier conference call, you did mention that we have a good dividend payout ratio because we don't Sammaan Capital Limited February 04, 2026 need capital.
How do you look at these 2 things vis-a-vis an RoE, which we need to kind of improve upon?
Gagan Banga
Sure.
So thanks, Amish, for the question.
It's actually a very relevant question from a longer- term strategy perspective.
And this is the stage at which the strategy has certainly evolved.
It will evolve into more specifics soon after the conclusion of the transaction.
When we say the asset-light model, what it allows us to do is to cover a very wide suite of products.
So you can start with products which are in the early 8% range and go all the way up to maybe 18%, 19%.
For an NBFC to long-term hold loans, which are, let's say, 8% to 9.5%, even 10% on its balance sheet is not really very RoE accretive, but we have distribution, we have scale.
And this is something that we have tremendous experience around.
As I shared a short while back, we have done business of this sort with banks and other counterparties of over INR1 lakh crore.
So we leverage on that experience, and continue to earn from that experience and also sweat our distribution, people, technology, etc., that we built over the years.
As our cost of funds reduce, as the ratings probably improve, the leverage, which is about 2.2x, should settle in the range of 4x to 4.5x.
That is the go-to long-term for the company, which I believe we should be hitting sometime around 2030.
And in a year or so of the investment, I believe we will be ready to start paying dividends.
There is a dividend payout policy of the Reserve Bank of India.
Conservatively, we believe that we should be in the 30% to 40% sort of dividend payout ratio over a longer-term, basis all the calculations of RoA and capital that we have simulated.
So yes, we would be a dividend-paying company.
That's clearly an agreement of minds between the management and the incoming shareholders.
The leverage will increase, but the leverage would increase to widen the product suite.
There is no need of leverage on the existing product suite.
On the existing product suite, which is more prime mortgage type assets, it is best to continue to use the low and granular liability model of a bank and leverage on the experience built by the - - of the company and continue to thrive using that model as well.
Amish Kanani
And sir, a quick follow-up on the collection side.
You did mention that there were good collections continuing in the month of Jan as well.
So is it possible one to quantify?
And if not, should we assume that the targets that we have kind of set out an aggressive target for the second half, should we be easily able to achieve that, sir?
Gagan Banga
It's an aggressive target.
So I'll not discount the team's efforts to say it will be easily done, but it will be done.
Moderator · Conference Operator
The next question is from the line of Meet Nitin Mewada from Sunrise Gilts & Securities.
Sammaan Capital Limited February 04, 2026
Meet Nitin Mewada
I just wanted to know the RBI granted the approval of IHC, which is around INR8,850 crores.
So is there any specific condition payment pending as of February 2026?
Gagan Banga
Nitin, we are awaiting the approval itself.
So it's not as if RBI has granted and there is some specific condition.
RBI will approve the preferential allotment.
If we look at other NBFCs and banks, it takes about 6 months to 9 months.
Our application is about 3 months old.
But we are moving rapidly.
And as we were able to get faster than usual approvals from other stakeholders, we are optimistic given the fact that we are an upper layer NBFC and therefore, RBI is familiar with our operations and IHC is also a very large company.
Thus, we should be in a position to hopefully expedite the approval process.
As of right now, everything is on track, and we are progressing very well.
Meet Nitin Mewada
Okay.
And another question is, in which new cities did the company has expanded the e- mortgage loans?
And how many branches added lately in this quarter?
Gagan Banga
So these will be Tier 3 and Tier 4 type of cities.
I don't know the names offhand.
And as of right now, our pace is calibrated, so we will look at only adding about 10 branches a quarter.
We've made a blueprint as to how do we get to about 400 to 500 cities very, very quickly over the course of the next 2 financial years.
The pace of the rollout will increase very rapidly post the investment coming through.
Moderator · Conference Operator
The next question is from the line of Sambit Roy from Credit Analyst.
Sambit Roy
Congratulations on the quarter.
I have 2 questions.
One would be, could you give any projections or any guidance for the next 2, 3 years on the lines of the revenue and the cost of credit?
Gagan Banga
So what we've guided on the cost of credit is on a longer-term basis, an annualized credit cost of 100 basis points.
That holds true with the existing product suite and the mix that we have of legacy and new book loans.
If we are to expand the product suite, obviously, there would be associated credit costs, which I'm not in a position to talk about since I've not yet articulated with all of you the widened product suite strategy.
So as far as our core mortgage product is concerned, we are fairly optimistic of running it at about 100 basis points of annualized credit cost.
As we look at new products and come back to you with a strategy post the investment, we will obviously elaborate the entire RoA tree as to how do we go from the yield, to opex, to credit cost, to cost of funds, to RoA, to RoE.
All of that will be obviously elaborated on.
Sambit Roy
Got it.
And anything on the lines of the revenue?
Gagan Banga
Again, Sambit, I think we are very close to a complete strategic shift in the operations of the company.
So if we are to look at as is where is, it would not be very consequential.
Like I said, I'm fairly hopeful of a fairly expeditious process coming through.
And in that context, I would say that any revenue guidance or anything of that sort would be more material and relevant, once we lay out the whole strategy for you.
Sammaan Capital Limited February 04, 2026 As I had requested last time, just please allow for the investment to come through.
It will take a quarter or 2, but the longer-term plan comes out post that investment.
There's a full detailed business plan that we worked out on and finalized with the investor.
We will be more than happy to share very granular details of that business plan with all of you.
Sambit Roy
No problem.
And just one last follow-up, as you mentioned about the legacy book, can you mention what is the sort of proportion of the legacy book to the growth book?
And next 2, 3 years, where do you see the legacy book to be?
Gagan Banga
All of that has been detailed in fairly granular numbers, what is the AUM, what is the legacy, what is the growth, the direction in which it is going down.
It's all there in the earning update.
So in the interest of time, since it's already all detailed, I'll move to the next question, and I'm sure the answers are all there.
Moderator · Conference Operator
The next question is from the line of ASN.
Raju, an Individual Investor.
ASN. Raju
Sir, what is the total provisions -- what was the total provisions?
And what is the estimated time to recollect all those?
Gagan Banga
So we have given a collection number that out of all the write-offs, recovery and provisions that we have done, over a period of time, we will recover, give or take, INR4,500 crores.
I think of that INR4,500 crores, we are still on track to net recover.
We had also spoken about the fact that till the time that the legacy book does not become a single-digit below as in INR10,000 crores, we will continue to use these provisions being released to stay as provisions and to facilitate the recovery, which is what we are doing.
So we do recover about INR400 crores to INR500 crores per quarter.
We package that as provisions, most of it and continue to carry those provisions.
On a net basis, over the next 3 years, once we are done with all of these provisions and the legacy book has run down, we should be able to cash recover about INR4,500 crores.
We take one last question, please.
Moderator · Conference Operator
The last question is from the line of Faizaan Joad from Singularity AMC.
Faizaan Joad
Just wanted to clarify the incremental cost of borrowing for Q3 and some colour on the uptick in interest expense as of the current quarter?
Gagan Banga
So we have done fairly aggressive borrowing.
Right at the start of the quarter we did a large dollar bond issuance, we did a domestic bond issuance, we also did some bank borrowings, so the interest cost uptick is largely on that account.
Right now, we are borrowing at, give or take 9%.
And we expect, as I said, a movement down to below 8% quickly right after this investment is to come through.
On an overall stock basis, we would expect that in about 9 months to 12 months, the cost of funds should go down by about 270 basis points.
That's what the goal is that by the end of March Sammaan Capital Limited February 04, 2026 '27, assuming that we are able to get this done very quickly by the end of March '27, the stock of borrowing should be down by a cost of about 270 basis points.
Faizaan Joad
Understood.
Understood.
Gagan Banga
Thank you, everyone, for patiently listening to us, for your support and I hope to get back to you probably much before the next quarter's release with an update on the investment and the plans thereafter.
Thank you.
Moderator · Conference Operator
Thank you.
I now hand the conference over to Mr. Aryan Sumra for the closing comments.
Aryan Sumra
Thank you.
I would like to thank the management for taking the time out, and I would also like to thank all the participants.
If you have any queries, feel free to contact us via MUFG, Investor Relations Advisors to Samman Capital Limited.
Thank you.
Moderator · Conference Operator
On behalf of Samman Capital Limited, that concludes this conference.
Thank you for joining us.
You may now disconnect your lines.