Five-star Business Finance Limited · NSE:FIVESTAR
Five-star Business Finance — Q2 FY2023 Earnings Presentation
39 slides from Five-star Business Finance's earnings presentation, Nov 28, 2022
Slide 1: Filing letter to stock exchanges on investor presentation
Date: November 28, 2022 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 Unaud
Slide 2: Five-Star Business Finance Limited Investor Presentation Q2 FY2023
Five-Star Business Finance Limited Investor Presentation Q2 FY2023 STRICTLY PRIVATE AND CONFIDENTIAL
Slide 3: Safe Harbour
Safe Harbour 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 any offer, recommendation or invitation to purchase or subscribe for
Slide 4: Presentation Path
Presentation Path Section 2 Section 1 Executive Summary – Company Overview Q2FY2023 Section 3 Section 4 Financial Performance, Asset Liability & ALM Quality & ECL – Q2FY2023 2
Slide 5: Five-Star Business Finance Limited – Overview
Section 1 Five-Star Business Finance Limited – Overview
Slide 6: Built to address large market opportunity and achieve scale
Built to address large market opportunity and achieve scale Proprietary Underwriting & Registered as NBFC-ND-SI with 2 decades of lending to Small Collections model fine-tuned the Reserve Bank of India Business Loan customers over 2 decades of experience Built to take advantage of the large addressa
Slide 7: The Five Star Journey
The Five Star Journey ₹57 bn AUM (Sep-22) ₹39 bn AUM (Mar-20) ₹5 bn AUM ₹1.3 bn AUM (Mar-17) ₹0.3 bn AUM (Mar-15) High Growth Phase (Mar-10) Setting the base 2017 Onwards Strengthening the for High Growth Building the Business Model 2015 – 2017 Business Model 2010 – 2015 Initial Phase 2005 – 2010 19
Slide 8: Five-Star Business Finance – At a glance
Five-Star Business Finance – At a glance Scale of Distribution Granular Book Asset Quality Liability Profile Profitability Operations ₹57.3bn / ₹46.4bn 352 100% Secured 1.15% 51 ₹2.8bn / ₹2.2bn AUM in H1FY23 / H1FY22 Number of Branches Loan Book H1FY23 Lender relationships PAT in H1FY23 / H1FY22 24%
Slide 9: Transformational Journey
Transformational Journey FY15 FY22 Number of Branches 39 >7x 300 Loans to borrowers (‘000) 5 >40x 218 Relationship Officers 59 >50x 3,176 Disbursements (₹ Mn) p.a. 793 30x 24,082(1) Assets Under Management (AUM) (₹ Mn) 1,315 >35x 50,671 Total Income (₹ Mn) 336 >35x 12,562 Profit After Tax (₹ Mn) 99
Slide 10: Key Success Factors
Key Success Factors Deep Understanding of Customer Compelling Economics & Best in Class Segment & Conservative Lending Industry Leading Asset Quality Return Metrics Practices Gross Stage 3 of < 1.5% Yields of ~24%; Spreads of ~12-13% 20 years of operations Net Stage 3 of <1% Industry leading ROA at
Slide 11: Unique Value Proposition – Product, Underwriting & Collections Strategy
Unique Value Proposition – Product, Underwriting & Collections Strategy Customer centric model underpinned by calibrated sourcing and distribution strategy and robust underwriting and collections practices Customer centric business model Comprehensive credit assessment and robust risk management Pro
Slide 12: Distribution Strategy
Distribution Strategy Maharashta Geography Total AUM % of AUM South India 54,092 94% Chhatisgarh Non-South 3,231 6% Uttar Pradesh Vintage-wise average AUM per branch (as of September 2022) 10 ₹464 mn Branch Vintage No of branches Average AUM <=1 year 84 15 1 – 3 years 46 112 3 – 5 years 112 173 Madh
Slide 13: Strategic Technology Focus
Strategic Technology Focus Robust investments in technology to efficiently manage the lending process, increase productivity and decrease costs 1 Augmentation of team for next ▪ Manual underwriting process with minimal technology involvement level of development 2 ▪ Significant investments in techno
Slide 14: Resilience through Crisis
Resilience through Crisis Demonetization GST Implementation 2.22% 2.24% 3.30% 2.80% 2.52% 1.45% Q2FY17 Q3FY17 Q4FY17 (Pre- (Demon (Post- Q1FY18 Q2FY18 Q4FY18 Demon Quarter) Demon (Pre- (GST Implementation (Post- Quarter) Quarter) GST Quarter) GST Quarter) Implementation) Covid-19 – Wave 1 Covid-19 –
Slide 15: Consistent Financial Performance over the years
Consistent Financial Performance over the years1 Particulars (₹ Mn) FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Operational Information Number of branches 39 64 103 130 173 252 262 299 Loan disbursals 793 1,319 3,830 7,072 14,822 24,087 12,450 17,562 AUM 1,315 1,981 4,834 10,084 21,128 3
Slide 16: Strong ESG Focus
Strong ESG Focus Sustainable Business Model Built Around Societal Impact ₹ ₹ Corporate Social Financial Inclusion Majority of AUM from LIG Responsibility 72% 74% ◼ Caters to the underserved market 66% ◼ CSR Committee is focused on 58% of small business loans 47% improving education, health and livel
Slide 17: Strong ESG Focus
Strong ESG Focus Social Impact achieved through… Significant Branch presence in Tier 3 to Tier 6 towns - semi-urban and fast-growing rural geographies 1% 2% Branch Presence • Significant branch presence in Tier 3 to Tier 6 towns 13% 23% • Low income borrowers • Customers with strong incomes from 22%
Slide 18: Strong Governance framework
Strong Governance framework Board of Directors 4 Independent Directors (Incl 1 Woman) 1 Executive Director Committees Chaired by Independent Other Committees 3 Non-Executive Directors (2 Nominees) Directors Audit Committee Business Resource Committee Corporate Responsibility Risk Management Committe
Slide 19: Distinguished Board of Directors
Distinguished Board of Directors Lakshmipathy Deenadayalan Anand Raghavan T T Srinivasaraghavan Bhama Krishnamurthy Chairman & Managing Director Independent Director Independent Director Independent Director Chair – Audit Committee Chair – Risk Management Committee Chair – Nomination & Remuneration
Slide 20: Experienced Management team
Experienced Management team Rangarajan Krishnan Srikanth Gopalakrishnan Vishnuram Jagannathan Parthasarathy Srinivasan Sathya Ganesh Chief Executive Officer Chief Financial Officer Chief Operating Officer Chief Credit Officer Chief Business Officer Vanamali Sridharan Jayaraman Sankaran Ramesh Kannah
Slide 21: Executive Summary – Q2FY2023
Section 2 Executive Summary – Q2FY2023
Slide 22: Executive Summary
Executive Summary • Five Star witnessed a strong first half of FY2023 across Growth, Profitability and Quality. • Business & Disbursal momentum back to pre-COVID levels and collections continue to be robust. • Y-o-Y growth of 24% on AUM and Gross Stage 3 assets of 1.15% AUM Profit After Tax Net Stag
Slide 23: Balance Sheet indicators
Balance Sheet indicators All amounts in ₹ Mn Disbursals AUM Net Worth 16% 127% 24% 8,028 40,076 57,324 38,570 52,965 5,684 46,393 34,533 3,533 8% 4% 41% Borrowings Expected Credit Loss Liquidity 7% 28,543 1,016 16,563 25,203 25,231 979 953 10,770 4% 7,949 Q2FY22 Q1FY23 Q2FY23 21
Slide 24: P&L indicators
P&L indicators All amounts in ₹ Mn Income Interest expense Other expenses 17% 23% (39%) 3,619 996 3,391 788 3,085 885 648 609 717 7% (13%) 6% Credit Cost PBT PAT 25% 22% 85 1,862 1,928 1,442 1,394 1,546 1,178 4% 3% 35 -4 Q2FY22 Q1FY23 Q2FY23 22
Slide 25: Financial Summary
Financial Summary 1. Net AUM growth of ₹4,359 Mn in Q2FY23 as against ₹599 Mn in Q2FY22 2. AUM was up 24% at ₹57,324 Mn as against ₹46,393 Mn as of 30 September 2021 3. Disbursements during the quarter was at ₹8,028 Mn as against ₹3,533 Mn during Q2FY22 4. Active loans almost touched 0.25 Mn as agai
Slide 26: Asset Quality & ECL
Section 3 Asset Quality & ECL FIVE STAR Business Finance Limited
Slide 27: Asset quality indicators
Asset quality indicators Collections Efficiency (%) 30+ (%) 100.196.6 99.2 95.6 101.5 98.2 102.0 93.9 92.6 93.3 19.36 16.78 17.66 15.71 13.62 Sep'22 Jun'22 Mar'22 Dec'21 Sep'21 Sep'22 Jun'22 Mar'22 Dec'21 Sep'21 Total amount of EMI received during the month (including arrears of previous months) div
Slide 28: Asset quality indicators
Asset quality indicators Amount in ₹ Mn As at Sep 2022 As at Jun 2022 As at Sep 2021 Bucket AUM % AUM AUM % AUM AUM % AUM Current (Stage-1) 44,888 78.31% 39,567 74.70% 31,084 67.00% 1-30 (Stage-1) 4,630 8.08% 5,077 9.59% 7,118 15.34% 31-60 (Stage-2) 3,575 6.24% 4,071 7.69% 4,151 8.95% 61-90 (Stage-2
Slide 29: Asset quality indicators
Asset quality indicators Amount in ₹ Mn As of September 30, 2022 Stage 1 Stage 2 Stage 3 Total Loans Outstanding (Gross) 49,518 7,147 660 57,324 ECL Provision 184 540 292 1,016 Loans Outstanding (Net) 49,334 6,607 368 56,308 ECL Provision % 0.37% 7.56% 44.27% 1.77% As of June 30, 2022 Stage 1 Stage
Slide 30: Financial Performance – Q2FY2023
Section 4 Financial Performance – Q2FY2023
Slide 31: Balance Sheet
Balance Sheet Particulars (₹ Mn) Q2FY2023 Q2FY2022 Q1FY2023 Assets Cash & Cash equivalents 3,438 8,498 4,096 Bank balances other than cash & cash equivalents 2,299 4,659 3,036 Loans1 57,635 46,444 54,543 Investments 1,644 3,237 1,892 Other financial assets 226 49 191 Non-Financial Assets 1,035 860 9
Slide 32: Quarterly & Half yearly Profit & Loss Statement
Quarterly & Half yearly Profit & Loss Statement Particulars (₹ Mn) Q2FY2023 Q2FY2022 Q1FY2023 Y-o-Y Q-o-Q H1FY2023 H1FY2022 H2FY2022 Y-o-Y H-o-H Loan Portfolio 57,324 46,393 52,965 24% 8% 57,324 46,393 52,965 24% 8% Interest Income 3,573 2,943 3,352 6,925 5,864 6,174 Net Gain on Fair value changes 1
Slide 33: RoA Tree
RoA Tree Particulars Q2FY2023 Q2FY2022 Q1FY2023 H1FY2023 H1FY2022 H2FY2022 Interest Income (as a % of average portfolio) 24.19% 24.00% 24.15% 24.15% 24.14% 24.00% Interest Expenses (as a % of average borrowings) 10.48% 10.50% 10.53% 10.56% 10.63% 10.39% Net Interest Income % 13.71% 13.50% 13.62% 13.
Slide 34: Liability & ALM
Section 5 Liability & ALM FIVE STAR Business Finance Limited
Slide 35: Diversified and Cost-Effective Funding Profile
Diversified and Cost-Effective Funding Profile Well diversified borrowing mix Number of lenders in each category 54 53 51 42 14 11 11 Increased number of lending relationships 6 13 from 30 + FY19 to 51 as of Sep 2022 30 16 11 23 24 20 12 Deepened relationships in the PSU and 1 1 2 9 7 16 4 private b
Slide 36: Diversified and Cost-Effective Funding Profile
Diversified and Cost-Effective Funding Profile Well diversified borrowing mix 100% 3% 3% 0% 14% 16% 23% 80% 30% 60% 38% 4% 43% 40% 6% 8% 50% 20% 37% 27% 0% Sep'22 Jun'22 Sep'21 Bank Term Loans Other Term Loans NCD Securitisation ECB Cost of incremental borrowings Cost of funds on the book 11.37% 10.
Slide 37: ALM Position as of Sep’22 – Cumulative
ALM Position as of Sep’22 – Cumulative Particulars (₹ Mn) 1-7 D 8-14 D 15-30 D 1-2 M 2-3 M 3-6 M 6M – 1Y 1-3 Y 3-5 Y >5 Y Opening Liquidity / Mismatch 8,707 Add: Inflows from advances 1 0 1,5021 675 685 2,234 5,011 20,753 19,250 6,922 Less: Outflows on borrowings 86 46 409 569 2,368 2,542 7,125 8,18
Slide 38: Strong Liquidity Position as of Sep’22
Strong Liquidity Position as of Sep’22 Amount in ₹ Mn Liquidity buffer as of Sep 2022 Unencumbered cash & cash equivalents 7,950 Unavailed sanction from banks / FIs 2,300 Total Liquidity 10,250 Projected Cashflow Schedule Q3FY23 Q4FY23 Q1FY24 Q2FY24 Opening Liquidity 10,250 10,806 11,651 10,121 Add:
Slide 39: Thank You
FIVE STAR KA Business Finance Limited FIVE STAR WN Business Finance Limited Thank You 37
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