Arman Financial Services (ARMANFIN) Q4 05/06 earnings summary

Executive summary

• FY06 income from operations rose to Rs 19.54m from Rs 16.40m; profit after tax was Rs 4.07m, and no dividend was declared.

• Lending remained focused on two- and three-wheelers, CNG rickshaws, consumer durables and personal finance; management cited growth opportunities in retail credit.

Financial highlights

• Income from operations was Rs 19.54m vs Rs 16.40m in FY05; the Directors’ Report described total business income growth of 19% YoY.

• PBT was Rs 6.14m vs Rs 5.36m; PAT was Rs 4.07m vs Rs 3.68m in the audited P&L.

• EPS was Rs 1.00 vs Rs 0.90; no dividend was declared for FY06, compared with 6% in FY05.

• Rs 0.80m was transferred to statutory reserve; reserves and surplus rose to Rs 13.90m from Rs 10.30m.

Outlook and guidance

• Management viewed FY07 growth prospects as favourable, citing manufacturing and services expansion and an expected recovery in agricultural output.

• Management planned to maintain focus on regional retail finance, leveraging dealer reach, collections and local-market knowledge amid rising competition.

• A Rs 500m ICICI Bank term loan was arranged in March 2006, repayable in 24 EMIs; further cash-credit proposals were pending at SIDBI and SBI.