Star Housing Finance posts strong Q2 growth with 62% rise in AUM and 66% income boost

Star Housing Finance Limited, a prominent player in the affordable housing finance sector and listed on the BSE, has reported exceptional growth for the quarter ending September 30, 2024. The company posted a significant 62% year-over-year increase in its assets under management (AUM), pushing it beyond the Rs. 500 crore mark to Rs. 517.84 crore. Additionally, income surged by 66% as a result of robust lending activities, underscoring Star HFL’s expanding footprint in India’s housing finance market.

Impressive Financial Growth Driven by Strategic Lending

Star Housing Finance has achieved a 60.56% year-over-year rise in interest income, attributed to increased disbursements. As a result, its net interest margin (NIM) reached a solid 7.47%. The company’s leverage remains conservative, standing at 2.68x, and its net worth reached Rs. 140.23 crore as of September 30, 2024. According to Star HFL’s Director & CEO, Kalpesh Dave, crossing the Rs. 500 crore AUM milestone is a testament to the company’s focus on sustainable growth and serving underserved communities with accessible home finance options.

Dave indicated that Star HFL’s robust growth reflects a combination of strategic market positioning and prudent financial management. Moving forward, the company aims to continue expanding its branch network and enhancing its liability base to support ongoing growth.

Asset Quality and Capital Strength Support Expansion Plans

Star HFL reported strong asset quality with its gross non-performing assets (GNPA) at 1.56% and net non-performing assets (NNPA) at 1.09%, both indicative of stringent risk controls and effective asset management. In terms of capital, the company has raised an additional INR 70 crore from major institutional partners, which is set to fuel further expansion across regions, particularly in states like Maharashtra, Gujarat, and Tamil Nadu. This capital infusion not only bolsters liquidity but also reinforces the company’s capacity to serve more customers in its target demographic of economically weaker sections (EWS) and low-income groups (LIG).

The company’s employee base, numbering over 250 finance professionals, will continue to play a pivotal role in maintaining service quality while scaling operations across new regions, particularly in semi-urban and rural areas. This aligns with Star HFL’s mission to create meaningful societal impact through affordable housing loans.

Expert Insights on Affordable Housing Market

Kalpesh Dave emphasized that the affordable housing finance sector presents unique opportunities, given the underserved nature of this segment. He highlighted that Star HFL’s focused approach towards the EWS and LIG sectors, coupled with its participation in the Pradhan Mantri Awas Yojana (PMAY) under the Credit Linked Subsidy Scheme (CLSS), offers significant growth potential. According to Dave, the company is committed to delivering value to stakeholders while fulfilling the housing finance needs of marginalized communities. Industry analysts also view the affordable housing market as a high-potential area, driven by the growing need for homeownership among lower-income families.

Financial Metrics Reflect Strong Performance

Key financial metrics for Q2-FY25 further demonstrate Star HFL’s growth momentum. Profit before tax (PBT) surged by 78.28% year-over-year to Rs. 3.94 crore, while profit after tax (PAT) increased by 47.83% to Rs. 3.06 crore. Borrowings rose by 67.59% to Rs. 375.51 crore, supporting Star HFL’s scaling loan book.

For the half-year ending September 2024, total income was recorded at Rs. 4,358.85 crore, representing a remarkable 65.54% increase over the same period last year. Operational performance remained strong with prudent expense management, contributing to an earnings per share (EPS) of Rs. 0.388 for the quarter, reflecting growth and stable shareholder returns.

Forward Outlook and Expansion Strategy

Looking ahead, Star Housing Finance Limited plans to deepen its presence in underserved markets while diversifying its liability base to manage growth sustainably. The company’s target market expansion includes semi-urban and rural regions, with a focus on catering to affordable housing needs. Management remains optimistic about delivering continued growth in shareholder value and aims to sustain high performance in the coming quarters through strategic geographic expansion and product innovation tailored to its target market.