Indostar Capital Finance Limited · NSE:INDOSTAR
Indostar Capital Finance — Q2 FY20 Earnings Presentation
38 slides from Indostar Capital Finance's earnings presentation, Nov 7, 2019
Slide 1: Exchange filing cover letter
INDOSTAR ICFL/LS/00161/2019-20 7 November 2019 BSE Limited National Stock Exchange of India Limited Listing Department, 1* Floor, Exchange Plaza, C-1, Block G P j Towers, Dalal Street, Fort Bandra Kurla Complex Mumbai - 400 001 Bandra (E}, Mumbai - 400 051 Scrip Code: 541336 Symbol: INDOSTAR Sub.: R
Slide 2: IndoStar posts PAT of Rs. 494mn in Q2 FY20; declares interim dividend
IndoStar Capital Finance Limited BSE: 541336 | NSE: INDOSTAR | Bloomberg: INDOSTAR:IN IndoStar posts PAT of Rs. 494mn in Q2 FY20; declares an interim dividend of 10% Net Revenue from operations at Rs. 2,197 mn up 19% YoY Pre-Provision Operating Profit at Rs. 1,397 mn up 22% YOY, driven by steady
Slide 3: Consolidated financial update for the quarter ended September 30, 2019
IndoStar Capital Finance Limited BSE: 541336 | NSE: INDOSTAR | Bloomberg: INDOSTAR:IN Consolidated financial update for the quarter ended September 30, 2019 a. All business segments are profitable b. Strong retail franchise; Retail AUMs make up 66% of aggregate AUMs, up from 37% last year c. Sourcin
Slide 4: Q2 & H1FY20 Results Update
INDOSTAR CAPITAL FINANCE LIMITED Q2 & H1FY20 Results Update 7 November 2019
Slide 5: Disclaimer
Disclaimer This presentation and the accompanying slides (the “Presentation”) have been prepared by IndoStar Capital Finance Limited (“IndoStar” or the “Company”) solely for information purposes and do not constitute an offer to sell or, recommendation or solicitation of an offer to subscribe for or
Slide 6: Q2FY20 performance: Key Highlights
Q2FY20 performance : Key Highlights ▪ Strong retail franchise – share in AUM at 66% up 29% YoY ▪ Net Revenue from Operations ₹ 2,197 mn, +19% YoY Healthy Business profile ▪ Cost Income ratio 36.4%, reduced 120 bps YoY ▪ Pre-provision Operating Profit ₹ 1,397 mn, +22% YoY ▪ Cash & Equivalents ₹ 10,27
Slide 7: National Footprint
National Footprint • Well balanced distribution network • Integration & consolidation underway 322 branches across 18 states * Some branches have multiple operating segments 322 322 322 159 155 305 305 305 129 142 114 46 55 55 55 55 10 10 10 10 10 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 SME Finance Housi
Slide 8: Q2 & H1FY20: Consolidated Profit & Loss Statement
Q2 & H1FY20: Consolidated Profit & Loss Statement Particulars (₹ mn) Q2FY20 Q1 FY20 QoQ % Q2FY19 YOY % H1FY20 H1FY19 YoY % Revenue from Operations 4,239 4,191 1% 3,245 31% 8,430 5,588 51% Interest Expenses (2,042) (2,253) -9% (1,404) 45% (4,295) (2,523) 70% Net Revenue from Operations 2,197 1,937 13
Slide 9: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (₹ mn) Sep-19 Jun-19 QoQ % Sep-18 YoY % Equity 31,022 30,591 1% 28,721 8% Borrowings 76,246 80,863 -6% 58,032 31% Others 320 1,159 -72% 971 -67% Total Liabilities 107,588 112,613 -4% 87,723 23% Loan Assets 90,590 101,568 -11% 77,665 17% Treasury Assets 13,121 7
Slide 10: Q2FY20: Business Segment Performance
Q2FY20: Business Segment Performance Corporate SME Housing ^ Particulars (₹ mn) CV Finance Consolidated ^ Lending Finance Finance Revenue from Operations 1,494 1,681 679 259 4,239 Interest Expenses (789) (643) (314) (124) (2,042) Net Interest Income 704 1,038 365 134 2,197 People Costs 42 225 47 60
Slide 11: H1FY20: Business Segment Performance
H1FY20: Business Segment Performance Corporate CV SME Housing Particulars (₹ Mn) Consolidated ^ Lending Finance Finance Finance Revenue from Operations 3,169 3,187 1,266 478 8,430 Interest Expenses (1,672) (1,316) (654) (236) (4,295) Net Interest Income 1,497 1,871 612 242 4,134 People Costs 91 480
Slide 12: Diversified Funding Profile
Diversified Funding Profile Funding Mix - June 2019 Funding Mix - Sep 2019 Equity Others Others 29% Equity CP 12% 27% CP 13% 2% 2% Banks NCD NCD 33% 21% 26% Banks 35% Incremental Funding mobilized Strong Credit Ratings ₹ mn Q3FY19 Q4FY19 Q1FY20 Q2FY20 Total Borrowing Type Rating Firm Ratings Banks 5
Slide 13: Strong Liquidity Position
Strong Liquidity Position Particulars ₹ mn Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Opening Cash & Equivalents* 10,270 5,070 4,891 8,110 11,138 15,558 Loan repayment inflows [Principal] 4,577 5,510 6,185 5,716 7,262 5,729 Total Inflow 14,847 10,580 11,077 13,827 18,400 21,287 Liability Repayment [P
Slide 14: Q2FY20: Quarterly Performance Trend (1/2)
Q2FY20: Quarterly Performance Trend (1/2) AUM (₹ mn) Loan Disbursements (₹ mn) On-book Loans Off-book Loans AUM Corporate Lending Retail Finance Total 117,352 115,792 107,181 20,280 77,665 77,482 15,130 14,224 16,591 13,047 12,357 975 8,675 8,546 102,222 101,568 90,590 8,920 7,570 6,612 77,665 76,50
Slide 15: Q2FY20: Quarterly Performance Trend (2/2)
Q2FY20: Quarterly Performance Trend (2/2) NPA* PAT (₹ mn) GNPA NNPA 739 4.7% 713 640 3.7% 471 494 2.6% 3.7% 0.9% 0.9% 3.0% 1.7% 0.6% 0.6% & & & Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 & Including NPAs from IIFL portfolio * GNPA & NNPA represents Stage 3 Assets Net worth
Slide 16: Asset Quality: Significant reduction in Retail NPAs
Asset Quality : Significant reduction in Retail NPAs Gross NPA (₹ mn) Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Corporate Lending 205 136 - 1,546 1,546 CV Finance - 11 2,226 2,651 1,411 SME Finance 455 574 545 677 437 Housing Finance - 3 7 19 26 Total 660 724 2,778 4,893 3,420 Net NPA (₹ mn) Q2FY19 Q3FY19
Slide 17: Corporate Lending: Cautious approach continues (1/3)
Corporate Lending : Cautious approach continues (1/3) Gross Disbursements (₹ mn) Corporate Lending AUM (₹ mn) 48,665 44,803 45,270 43,067 11,605 36,267 4,127 4,787 2,856 2,869 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 AUM Breakup: RE vs. Non-RE • Well on course to achieve
Slide 18: Corporate Lending Profit and Loss (2/3)
Corporate Lending Profit and Loss (2/3) Particulars (₹ mn) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Revenue from Operations 2,206 1,940 1,817 1,676 1,494 Interest Expenses (836) (789) (790) (883) (789) Net Interest Income 1,370 1,151 1,028 793 704 People Costs 67 23 108 49 42 Operating Expenses
Slide 19: Corporate Lending: Key ratios (3/3)
Corporate Lending : Key ratios (3/3) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Revenue from Operations * 16.7% 15.7% 15.6% 14.7% 14.9% Net Interest Income * 10.4% 9.3% 8.8% 6.9% 7.0% Operating Expenses * 0.5% 0.2% 0.9% 0.4% 0.4% Cost / Income 4.9% 2.1% 10.7% 6.2% 6.1% ✓ Pickup in precautionary Pr
Slide 20: On track to attain 75-25 Retail Corporate AUM mix by March-20
On track to attain 75-25 Retail Corporate AUM mix by March-20 Growing Proportion of Retail Lending in AUM and Disbursements AUM: CL vs Retail (%) Disbursements: CL vs Retail (%) 77,665 77,482 1,17,352 1,15,792 1,07,181 13,047 8,546 20,280 12,357 6,612 xxx 37% 42% 43% 61% 61% 57% 63% 66% 68% 67% 63%
Slide 21: Calibration in retail business volumes
Calibration in retail business volumes Retail AUM (₹ mn) Retail Disbursements (₹ mn) Significant growth in Retail AUM with IIFL acquisition 8,920 8,675 72,083 72,726 70,914 1,681 1,308 7,570 5,478 6,364 7,080 1,014 1,530 5,690 18,849 19,017 1,384 18,637 3,565 1,049 3,742 1,094 32,680 29,000 4,241 92
Slide 22: CV Finance: Transitioning to leverage ICICI partnership (1/3)
CV Finance : Transitioning to leverage ICICI partnership (1/3) CV Finance – Monthly Disbursement Trend (₹ mn) 2,807 2,452 1,728 1,600 1520 1510 989 1,120 1,054 825 732 371 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 ✓ CV Finance AUM ₹ 45,197 mn up over 5x YoY
Slide 23: CV Finance: Strong operating performance (2/3)
CV Finance : Strong operating performance (2/3) Particulars (₹ mn) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Revenue from Operations 234 346 542 1,506 1,681 Interest Expenses (89) (139) (204) (673) (643) Net Interest Income 145 207 338 833 1,038 People Costs 119 97 149 255 225 Operating Expenses 10
Slide 24: CV Finance: Key ratios (3/3)
CV Finance : Key ratios (3/3) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Revenue from Operations * 17.5% 17.1% 18.7% 16.6% 18.4% Branches & Employees Net Interest Income * 10.8% 10.3% 11.6% 9.2% 11.4% Operating Expenses * 16.9% 10.6% 9.1% 4.3% 4.0% 350 3,000 305 305 305 Cost / Income 156.5% 103.5% 7
Slide 25: SME Finance: Business volumes moderated in Q2 (1/3)
SME Finance : Business volumes moderated in Q2 (1/3) SME Finance – Monthly Disbursement Trend (₹ mn) 560 575 499 530 440 465 344 344 250 256 234 174 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 ✓ Disbursement during Q2FY20 : ₹ 664 mn ✓ Direct assignment in Q2FY
Slide 26: SME Finance remains Profitable (2/3)
SME Finance remains Profitable (2/3) Particulars (₹ mn) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Revenue from Operations 544 594 585 587 679 Interest Expenses (284) (303) (309) (341) (314) Net Interest Income 260 292 276 247 365 People Costs 56 40 38 46 47 Operating Expenses 21 21 23 24 32 Pre-p
Slide 27: SME Finance: Key ratios (3/3)
SME Finance : Key ratios (3/3) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Revenue from Operations * 12.5% 13.0% 13.3% 13.6% 17.1% Branches & Employees Net Interest Income * 6.0% 6.4% 6.3% 5.7% 9.2% Operating Expenses * 1.8% 1.3% 1.4% 1.6% 2.0% 76 86 84 98 93 Cost / Income 29.9% 20.8% 22.3% 28.4% 2
Slide 28: Housing Finance: Calibrated disbursements (1/3)
Housing Finance: Calibrated disbursements (1/3) Housing Finance – Monthly Disbursement Trend (₹ mn) 415 430 440 438 363 373 308 333 316 320 271 286 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 ✓Q2FY20 disbursements ₹ 922 mn ✓Direct assignment in Q2FY20 ₹ 511 mn
Slide 29: Housing Finance: Profitability improves further (2/3)
Housing Finance: Profitability improves further (2/3) Particulars (₹ mn) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Revenue from Operations 80 133 189 220 259 Interest Expenses (41) (63) (84) (112) (124) Net Interest Income 38 70 105 108 134 People Costs 93 81 28 55 60 Operating Expenses 30 24 28 24
Slide 30: Housing Finance: Key ratios (3/3)
Housing Finance : Key ratios (3/3) Q2 FY 19 Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Branches & Employees Revenue from Operations * 13.2% 14.3% 15.8% 15.7% 16.5% Net Interest Income * 6.4% 7.6% 8.8% 7.7% 8.6% Operating Expenses * 20.4% 11.3% 4.7% 5.7% 5.4% 418 370 354 329 Cost / Income 320.1% 148.3% 53.2%
Slide 31: In Summary....
In Summary…. ✓ All businesses are profitable ✓ Strong liquidity profile and capitalisation to aid growth foray ✓ Well placed to achieve a Retail Corporate AUM mix of 75-25 by March-20 ✓ CV Finance Business is the key retail business driving growth and profitability ✓ ROE accretive partnership with I
Slide 32: Entrepreneurial Leadership Team with Strong Sponsor Backing
Entrepreneurial Leadership Team with Strong Sponsor Backing ✓ Several years of experience and in-depth understanding of the specific industry and geographic regions ✓ Separate business & credit heads for each vertical ✓ Strong alignment through large ESOP program (8.5% of diluted shares) ◼ 20+ years
Slide 33: Entrepreneurial Leadership Team with Strong Sponsor Backing
Entrepreneurial Leadership Team with Strong Sponsor Backing ◼ 24 years of experience with ◼ 20 years of experience financial Institutions with banks & financial ◼ 21 years of experience with banks Institutions & financial Institutions ◼ Previously worked with Fullerton India, Citigroup, ◼ Previously
Slide 34: Strong & Distinguished Board
Strong & Distinguished Board ✓ 13 committees composed of independent and non-independent directors and also employees1 ✓ Distinct and delineated responsibilities to ensure good corporate governance ✓ Strong capital sponsorship also providing access to best industry practices and international corpor
Slide 35: Robust Risk Management Framework
Robust Risk Management Framework Organizational Framework Aligned Strong Credit / Underwriting Processes Followed by to Mitigate Risk Robust Monitoring Mechanism Business National Credit National Ops 1 Structured Credit Appraisal / Approvals Head Manager Head • Corporate: Pre-screened by corporate l
Slide 36: Promoters Shareholding Structure
Promoters Shareholding Structure Everstone1 48.00 % 57.00% Indostar Capital3 100.0% (Promoter) IndoStar Capital Finance Limited 52.00 % Promoter Group4 Other Investors2 3.74% Strong capital sponsorship of Everstone Group 7 ‘Private Equity Firm of the Year in India’ India and SEA US$5.0bn focused AuM
Slide 37: Shareholding Pattern
Shareholding Pattern Shareholding @ 30 September 2019 Major Shareholders Foreign Promoter & Promoter Group Body Company Corporates 2.4% Trusts Management Team and Employees* 0.3% 1.8% Insurance SBI MF 4.4% Lenarco (Advent) Others ICICI Prudential Life Insurance 9.2% Fidelity Emerging Markets Fund HD
Slide 38: For Further Queries
For Further Queries Amol Joshi Chintan Mehta Chief Financial Officer IR Consultant Contact No: +91 22 4315 7090 Contact No: + 91 22 6627 6571 Email - ajoshi@indostarcapital.com Email – chintan.mehta@dickensonworld.com Rajagopal Ramanathan IRO Contact No: +91 22 4315 7068 Email - rramanathan@indostar
IndoStar Capital Finance — Q2 FY20 Earnings Presentation on 6ix