­Promoter support and synergies arising from association with IIFL Finance Group
Samasta is supported by the managerial, and the financial synergies of the group. IIFL Group made a strategic investment in IIFL Samasta Finance Limited, and the Group shall continue to hold a controlling stake in the business. The credit profile of Samasta derives significant financial flexibility as a part.
Samasta has been receiving periodical support from its promoters over the years. IIFL Group had infused a total capital of ~Rs. 200 Cr during Q4FY23. Furthermore, Samasta is expected to receive funding support from the group to support the expansion of its business operations. It also has representatives on the board from IIFL group.
 Acuite believes that the microfinance business is strategically important for IIFL group and it helps diversify the financial product suite of the parent and expand its presence in the financial inclusion space. Also, the microfinance business is scalable, and is expected to grow moderately over the medium term.
 
Adequate Earnings Profile 
At IIFL Finance group level, the revenue streams comprise of IIFL Finance Limited (Parent Company) and its subsidiaries IIFL Home Finance Limited and IIFL Samasta Finance Limited. The parent company along with IIFL Home Finance Limited contributed ~90 percent towards the bottom-line in FY2023.
On a consolidated level, the IIFL group reported a profit of Rs. 1,607.55 Cr as on March 31, 2023 improving from Rs. 1,188.25 Cr as on March 31, 2022. On a standalone basis, Samasta’s profitability indicators were healthy marked by Net Interest Margin (NIM) which stood at 12.09 percent as on March 31, 2023. The NBFC-MFI reported a PAT of Rs 128.18 Cr as on March 31, 2023 vis-à-vis Rs 50.60 Cr. as on March 31, 2022. Samasta reported a PAT of Rs. 91.60 Cr during Q1FY24. IIFL Samasta’s loan portfolio has grown steadily owing to healthy disbursement levels. The company’s overall disbursement remained healthy, the disbursement stood at Rs. 10,213.76 Cr as on FY2023 as compared to Rs. 6,483.84 Cr as on FY2022.
Acuité believes that the ability of the company to sustain the improved levels of earnings profile would be a key monitorable.

Significant AUM growth while maintaining sound asset quality
IIFL Samasta’s loan portfolio outstanding as on March 31, 2023 grew significantly to Rs.10,552.24 Cr as compared to Rs. 6,483.84 Cr as on March 31, 2022. The loan portfolio outstanding further grew to Rs. 11,072.31 Cr as on June 30, 2023.  The loans have an average tenure ranging upto 24months. IIFL Samasta has demonstrated sound asset quality, as reflected in the Gross NonPerforming Assets (GNPA) of 2.11percent and NNPA of 0.62 percent as on June 30, 2023. The company has structured inherent checks for effective risk management that include lending policy, underwriting process and dedicated due diligence team, which helps to maintain asset quality. The company’s collection efficiency for current month due averages above 95 percent for last 6 month ended June 30, 2023, resulting to an ontime portfolio of 95.50 percent as on June 30, 2023.
 Acuite believes that the ability of the company to grow its loan portfolio while maintaining asset quality will be key monitorable.

­Geographic concentration in operations
IIFL Samasta has its operations spreads across 21 states spanning 363 districts through its network of 1,352 branches as on June 30, 2023. The company has added 460 branches during FY2023. Despite the expansion geographic concentration of loan portfolio was seen in the top 4 states (Bihar, Tamil Nadu, Karnataka and Rajasthan) comprising ~60 percent of the AUM. IIFL Samasta has been gradually reducing its exposure to geographic concentration with addition of new branches in different districts and venturing in new states. Acuité believes that containing additional slippages while maintaining the growth in the loan portfolio and reducing geographic concentration will be crucial.
 
Susceptibility to risks inherent to microfinance segment
IIFL Samasta Finance Limited primarily extends unsecured loans to economically challenged borrowers who have limited ability to absorb income shocks. Since financial assistance to economic challenged borrowers is a sensitive issue, from government standpoint the regulatory dispensation in respect of the policies becomes relevant. Any changes in the regulatory environment impeding the ability of entities like IIFL Samasta to enforce collections, etc will have an impact on its operational performance. Besides the regulatory risks, the inherent nature of the business renders the portfolios vulnerable to event risks such as natural calamities in the area of operations.