Five-star Business Finance Limited · NSE:FIVESTAR
Five-star Business Finance — Q2 FY2025 Earnings Presentation
59 slides from Five-star Business Finance's earnings presentation, Oct 29, 2024
Slide 1: Stock exchange filing letter
Date: October 29, 2024 The National Stock Exchange of India Limited, BSE Limited Exchange Plaza, Listing department, Bandra-Kurla Complex, First floor, PJ Towers, Bandra (E), Mumbai 400 051 Dalal Street, Fort Mumbai 400 001 Symbol: FIVESTAR Scrip code: 543663 Sub: Investor Presentation on the Financ
Slide 2: Reaching the Unreached – Investor Presentation Q2FY2025
Reaching the Unreached Five-Star Business Finance Limited Investor Presentation | Q2FY2025 STRICTLY PRIVATE AND CONFIDENTIAL
Slide 3: Safe Harbour
Safe Harbour Five-Star Business Finance Limited | Investor Presentation – Q2FY25 This presentation and the accompanying slides (the “Presentation”) which have been prepared by Five-Star Business Finance Limited (the “Company”) have been prepared solely for information purposes and do not constitute
Slide 4: Glossary
Glossary Five-Star Business Finance Limited | Investor Presentation – Q2FY25 ▪ All amounts are given in ₹ Million unless specified otherwise. ▪ Gross NPA or Gross Stage 3 assets represents loans which are more than 90 days past due (till the quarter ended Sep 2022); for the quarters post Sep 2022, t
Slide 5: Presentation Path
Presentation Path Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Executive Summary SECTION 1 SECTION 2 Business Updates Asset Quality & ECL SECTION 3 SECTION 4 Liability & ALM Financial Statements SECTION 5 SECTION 6 Company Overview 4
Slide 6: Executive Summary
EXECUTIVE SUMMARY
Slide 7: Executive Summary | Q2FY25
Executive Summary | Q2FY25 Five-Star Business Finance Limited | Investor Presentation – Q2FY25 q-o-q y-o-y Branches Loan Disbursement Loan Portfolio 660 ₹ 12,507 Mn ₹ 109,272 Mn +113 +204 -5% +4% +6% +32% Gross NPA 30+ DPD Profit After Tax 1.47% 8.44% ₹ 2,679 Mn +6 bps +12 bps +33 bps -15 bps +7% +3
Slide 8: Executive Summary | H1FY25
Executive Summary | H1FY25 Five-Star Business Finance Limited | Investor Presentation – Q2FY25 y-o-y Branches Loan Disbursement Loan Portfolio 660 ₹ 25,689 Mn ₹ 109,272 Mn +204 +10% +32% Gross NPA 30+ DPD Profit After Tax 1.47% 8.44% ₹ 5,195 Mn +12 bps -15 bps +36% Net Interest Margin Return on Asse
Slide 9: Q2FY25 Performance – At a glance
Q2FY25 Performance – At a glance Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Scale of Distribution Granular Book Asset Quality Liability Profile Profitability Operations ₹109.3bn / ₹82.6bn 660 100% Secured 1.47% 43 ₹2.7bn / ₹2.0bn AUM in Q2FY25 / Q2FY24 Number of Branches Loa
Slide 10: Strong Financial Performance over the years
Strong Financial Performance over the years Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Particulars (₹ Mn) FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 I-GAAP I-GAAP I-GAAP I-GAAP IND-AS IND-AS IND-AS IND-AS IND-AS IND-AS Operational Information Numbe
Slide 11: Distinguished Board of Directors
Distinguished Board of Directors Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Promoter Director Lakshmipathy Deenadayalan Chairman & Managing Director Independent / Non- Executive Directors Anand Raghavan T T Srinivasaraghavan Bhama Krishnamurthy Select other Directorships Shr
Slide 12: Profile of Board of Directors
Profile of Board of Directors Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Srikanth Gopalakrishnan Lakshmipathy Deenadayalan Rangarajan Krishnan Joint Managing Director / CFO Chairman & Managing Director Joint Managing Director / CEO Finance professional with over 20 years of
Slide 13: Experienced Management Team
Experienced Management Team Five-Star Business Finance Limited | Investor Presentation – Q2FY25 22 22 21 9 22 9 22 7+ Lakshmipathy Deenadayalan Rangarajan Krishnan Srikanth Gopalakrishnan Vishnuram Jagannathan Chairman & MD JMD & CEO JMD & CFO Chief Operating Officer Education: Bachelor of Engineeri
Slide 14: Business Updates
BUSINESS UPDATES
Slide 15: Business Updates (1/2)
Business Updates (1/2) Five Star Business Finance Limited | Investor Presentation – Q2FY25 Operations 1. Net Q-o-Q AUM growth of ₹5,833 Mn in Q2FY25 as against ₹6,811 Mn in Q2FY24. AUM was up 32% Y-o-Y at ₹109,272 Mn as of September 30, 2024 as against ₹82,644 Mn as of September 30, 2023. 2. Disburs
Slide 16: Business Updates (2/2)
Business Updates (2/2) Five Star Business Finance Limited | Investor Presentation – Q2FY25 Liabilities 1. In Q2FY2025, the company received sanctions for incremental debt of ₹4,200 Mn, availing ₹5,750 Mn (inclusive of some un-availed sanctions from previous quarters), at a weighted average rate of i
Slide 17: Balance Sheet Indicators
Balance Sheet Indicators Five Star Business Finance Limited | Investor Presentation – Q2FY25 Quarterly Data Last 5 years data All amounts in ₹ Mn Disbursements AUM Net Worth Disbursements 4% 21% 48,814 32% 1,09,272 57,233 33,914 13,182 1,03,439 54,498 12,043 12,507 47,363 24,087 82,644 17,562 6% 5%
Slide 18: P&L Indicators
P&L Indicators Five Star Business Finance Limited | Investor Presentation – Q2FY25 Quarterly Data Last 5 years data All amounts in ₹ Mn Income Interest Expense Other Expenses Income 35% (17%) 21,951 (54%) 7,058 1,565 1,627 6,694 1,582 1,631 15,289 1,389 12,562 5,224 10,513 7,873 1,059 (3%) (4%) 5% Q
Slide 19: Consistent & Best-in-class Spreads
Consistent & Best-in-class Spreads Five Star Business Finance Limited | Investor Presentation – Q2FY25 Portfolio Yield Cost of borrowing Spread 25.00% 12.00% 25.00% 14.00% 24.44% 24.18% 24.17% 24.23% 24.27% 24.50% 24.19% 24.24% 24.22% 24.50% 24.16% 24.05% 13.50% 24.19% 24.00% 24.18% 11.50% 24.00% 13
Slide 20: Well-diversified portfolio cuts
Well-diversified portfolio cuts Five Star Business Finance Limited | Investor Presentation – Q2FY25 AUM by Geography AUM by Ticket Size Q2FY25 1% 1% Q2FY24 Q2FY25 1% 0% Q2FY24 1% 0% 6% 5% 12% 6% 6% 10% 30% 33% 34% ATS for ATS for 40% 19% 20% Q2FY25 Q2FY24 3.48L 3.39L 48% 53% 38% 35% TN AP TS KA MP O
Slide 21: Asset Quality & ECL
ASSET QUALITY & ECL ' weil
Slide 22: Asset Quality Indicators (1/2)
Asset Quality Indicators (1/2) Five Star Business Finance Limited | Investor Presentation – Q2FY25 Collections Efficiency (%) 30+ (%) 8.59 8.35 8.11 8.44 7.89 1.35 1.40 1.47 1.38 1.41 100.3 98.0 99.1 97.5 99.5 97.8 98.5 97.2 98.4 97.0 7.24 6.95 6.51 6.71 6.98 Sep'23 Dec'23 Mar'24 Jun'24 Sep'24 Sep'2
Slide 23: Asset Quality Indicators (2/2)
Asset Quality Indicators (2/2) Five Star Business Finance Limited | Investor Presentation – Q2FY25 Amount in ₹ Mn As at Sep 2024 As at Jun 2024 As at Sep 2023 Bucket AUM % AUM AUM % AUM AUM % AUM Current (Stage-1) 93,974 86.00% 89,696 86.71% 71,482 86.50% 1-30 (Stage-1) 6,071 5.56% 5,351 5.17% 4,060
Slide 24: ECL Provisioning
ECL Provisioning Five Star Business Finance Limited | Investor Presentation – Q2FY25 Amount in ₹ Mn As of September 30, 2024 Stage 1 Stage 2 Stage 3 Total Loans Outstanding (Gross) 100,045 7,623 1,604 109,272 ECL Provision 399 569 831 1,799 Loans Outstanding (Net) 99,646 7,054 773 107,474 ECL Provis
Slide 25: Lag NPA
Lag NPA Five Star Business Finance Limited | Investor Presentation – Q2FY25 Amount in ₹ Mn Q2FY2025 Q2FY2024 Q2FY2023 Q2FY2022 Loan Portfolio 109,272 82,644 57,324 46,393 Gross Stage 3 assets 1,604 1,118 660 667 Gross Stage 3 assets % 1.47% 1.35% 1.15% 1.44% Gross Stage 3 assets % - 1 year Lag 1.94%
Slide 26: Liability & ALM
LIABILITY & ALM
Slide 27: Well-diversified Liability Franchise (1/2)
Well-diversified Liability Franchise (1/2) Five Star Business Finance Limited | Investor Presentation – Q2FY25 Liability franchise consists of a strong set of lenders who can support the company’s plans Number of lenders Lenders to the Company State Bank of India | Bank of Baroda | Union Bank of Ind
Slide 28: Well-diversified Liability Franchise (2/2)
Well-diversified Liability Franchise (2/2) Five Star Business Finance Limited | Investor Presentation – Q2FY25 Diversified borrowing mix across lender category and product category Borrowing exposure and Cost of borrowing Borrowings 25,231 31,785 42,473 43,167 48,193 57,911 63,158 67,239 68,795 outs
Slide 29: Cashflow Position as of Sep'24 – Cumulative
Cashflow Position as of Sep’24 – Cumulative Five Star Business Finance Limited | Investor Presentation – Q2FY25 No Cumulative mismatches in any of the time buckets Particulars Up to 1M 1-2 M 2-3 M 3-6 M 6M – 1Y 1-3 Y 3-5 Y >5 Y Opening Liquidity 18,527 17,601 17,755 16,670 16,416 17,245 20,477 40,82
Slide 30: Strong Liquidity Position as of Sep'24
Strong Liquidity Position as of Sep’24 Five Star Business Finance Limited | Investor Presentation – Q2FY25 Amount in ₹ Mn Liquidity buffer as of Sep 2024 Unencumbered cash & cash equivalents 16,994 Unavailed sanction from banks / FIs 2,450 Total Liquidity 19,444 Projected Cashflow Schedule Q3FY25 Q4
Slide 31: Financial Statements
FINANCIAL STATEMENTS
Slide 32: Balance Sheet
Balance Sheet Five Star Business Finance Limited | Investor Presentation – Q2FY25 Particulars (₹ Mn) Q2FY2025 Q2FY2024 Q1FY2025 Assets Cash & Cash equivalents 12,115 10,154 15,405 Bank balances other than cash & cash equivalents 1,195 1,341 1,359 Loans1 110,010 81,323 104,289 - Loan portfolio 109,27
Slide 33: Profit & Loss Account
Profit & Loss Account Five Star Business Finance Limited | Investor Presentation – Q2FY25 Particulars (₹ Mn) Q2FY2025 Q2FY2024 Q1FY2025 Y-o-Y Q-o-Q H1FY2025 H1FY2024 Y-o-Y Loan Portfolio 109,272 82,644 103,439 32% 6% 109,272 82,644 32% Interest Income (1) 6,793 5,041 6,411 35% 6% 13,203 9,678 36% -
Slide 34: RoE Tree
RoE Tree Five Star Business Finance Limited | Investor Presentation – Q2FY25 Particulars Q2FY2025 Q2FY2024 Q1FY2025 H1FY2025 H1FY2024 Interest Income (as a % of average portfolio) 24.18% 24.19% 24.22% 24.22% 24.29% Interest Expenses (as a % of average borrowings) 9.65% 9.71% 9.65% 9.65% 9.75% Net In
Slide 35: Company Overview
COMPANY OVERVIEW
Slide 36: Our Journey
Our Journey Five-Star Business Finance Limited | Investor Presentation – Q2FY25 2023 2005 – 2015 373 branches; ₹69bn AUM AA- rating BUILDING & Listing on the bourses STRENGTHENING PHASE 2020 252 branches; ₹39bn AUM Post COVID, back to A rating quality growth Strong portfolio growth 2014 Marquee PE i
Slide 37: Who we are
Who we are Five-Star Business Finance Limited | Investor Presentation – Q2FY25 NBFC providing secured financial solutions to Small Business customers and Self-employed Individuals who are largely cut-off from formal lending ecosystem Deep understanding of customer behavior and strong knowledge of ma
Slide 38: Current Shareholding
Current Shareholding Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Institutional Promoters Top Institutional Investors (ex-PE and Promoter) 2.86% Investor name % stake* Individual Promoter Others 13.14% 18.29% & Promoter Group Fidelity Investments 4.97% Nomura Asset Management
Slide 39: Growth Opportunity & Levers (1/2)
Growth Opportunity & Levers (1/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Large Market Opportunity to be served through multiple growth levers Large Market Opportunity Five Star Growth Strategy Fiscal 2024E MSME Credit Gap To address the large untapped market opportunity
Slide 40: Growth Opportunity & Levers (2/2)
Growth Opportunity & Levers (2/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Growth Strategy shall be borrower led and not led by increase in ticket size 4,50,000 0.35 4,00,000 3,85,966 0.29 0.30 0.25 96.29% 3,50,000 0.25 0.27 0.24 0.25 3,00,000 84.22% COVID years where ther
Slide 41: Customer & Product
Customer & Product Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Well thought out customer & product strategies – helps us remain insulated even during periods of stress Customer Strategy Product Strategy Who are our customers – Small Business Owners and Self- Loan purpose – Lo
Slide 42: Distribution
Distribution Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Gradual growth in newer regions; significant ramp-up upon reaching the comfort state 660 branches | 10 States / UT State-wise portfolio break-up Normal branches – 561; Split branches – 99 No of State Q2FY25 FY24 FY23 FY
Slide 43: Cluster Strategy – Ideal Branch Structure
Cluster Strategy – Ideal Branch Structure Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Evolution of Branch Structure at Five-Star Till FY2016 2017 – 2023 2023 till date… Normal Branch Strategy Super Branch Strategy Cluster / Ideal Branch Strategy 5-6 Relationship Officers Add
Slide 44: Robust Proprietary Underwriting (1/2)
Robust Proprietary Underwriting (1/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Underwriting strategy fine-tuned over years of experience – to serve a “not so easy to underwrite TAM” Difficulties in evaluating the Addressable Market Segment Five Star’s capabilities Credit a
Slide 45: Robust Proprietary Underwriting (2/2)
Robust Proprietary Underwriting (2/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Multiple levels of appraisal – Final sanction can be provided only by the Independent Credit team Branch Appraisal Credit Appraisal Pre-login assessment by the branch – Basic verification of Fie
Slide 46: Strong on-ground Collections infrastructure (1/2)
Strong on-ground Collections infrastructure (1/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 First-time business loan borrowers migrating from informal to formal ecosystem necessitates multiple touchpoints On-ground team Typical Recovery Process at Five Star – Parties involv
Slide 47: Strong on-ground Collections infrastructure (2/2)
Strong on-ground Collections infrastructure (2/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Focus on Unique Customer Collections Efficiency has contributed to significant improvement in portfolio profile Current Portfolio 30+ Portfolio 83.51% 87.39% 16.78% 79.45% 74.17% 76.
Slide 48: Technology Strategy (1/3)
Technology Strategy (1/3) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Robust investments in technology to efficiently manage the lending process, increase productivity and decrease costs ▪ Manual underwriting process with minimal Till FY2017 technology involvement ▪ Moved to
Slide 49: Technology Strategy (2/3)
Technology Strategy (2/3) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Comprehensive Tech stack to derive productivity and efficiency benefits Loan Origination & Underwriting Loan Servicing & Support Systems Reporting / MIS Loan Management Collections ML Models Customer Self S
Slide 50: Technology Strategy (3/3)
Technology Strategy (3/3) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Focused tech strategy / stack have helped achieved key benefits across functional verticals Loan Origination Credit Underwriting Collections ▪ Consistently improving TAT ▪ Fully rounded view of the borrower
Slide 51: Risk Management & Audit (1/2)
Risk Management & Audit (1/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Robust Risk Management and Risk-based Internal Audit Framework ensure strong oversight Board of Directors Risk Management Committee Audit Committee ALCO Credit Committee Business Resource Statutory Audi
Slide 52: Risk Management & Audit (2/2)
Risk Management & Audit (2/2) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Robust Risk Management and Risk-based Internal Audit Framework ensure strong oversight Risk Management Framework Risk based Internal Audit Framework Credit / Collateral / Portfolio Risk Strong framework
Slide 53: ESG @ Five Star (1/5)
ESG @ Five Star (1/5) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 ESG @ Five Star primarily revolves around the aspects of “S” (Social impact) and “G” (Governance) Business Responsibility and Comprehensive ESG and Comprehensive External Sustainability Report (BRSR) BRSR polic
Slide 54: ESG @ Five Star (2/5)
ESG @ Five Star (2/5) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Social Impact Indicators – Financial Inclusion (“Reaching the Unreached”) Company Vision Reaching the Unreached through suitable credit solutions Mission Statement Provide appropriate credit solutions to the hi
Slide 55: ESG @ Five Star (3/5)
ESG @ Five Star (3/5) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Social Impact Indicators – Branch Presence Significant Branch presence in Tier 3 to Tier 6 towns - semi-urban and fast-growing Branch Presence • Significant branch presence in Tier 3 to Tier 6 towns rural geogr
Slide 56: ESG @ Five Star (4/5)
ESG @ Five Star (4/5) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Strong Governance Framework Board of Directors 1 2 4 1 Promoter Director Executive Directors Independent Directors Non-Executive Director (including 1 Woman Director) Board Risk Management Nomination & Stakehol
Slide 57: ESG @ Five Star (5/5)
ESG @ Five Star (5/5) Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Robust Corporate Governance supported by Board approved Policies The Board of Directors helps improve Corporate visibility, image and governance and provides strong comfort to external stakeholders. The Board a
Slide 58: Strong Human Capital
Strong Human Capital Five-Star Business Finance Limited | Investor Presentation – Q2FY25 Strong & adequate Human Capital for the size and scale of operations Function No of employees Proportion of Headcount – Branch vs HO Business & Collections 6,854 4% - Relationship Officers 5,542 - Branch Manager
Slide 59: Thank You
Five Star Business Finance Limited | Investor Presentation – Q1FY25 Thank You For further information, you may please email to: ir@fivestargroup.in
Five-Star Business Finance — Q2 FY2025 Earnings Presentation on 6ix