Indostar Capital Finance Limited · NSE:INDOSTAR
Indostar Capital Finance — Q2 FY19 Earnings Presentation
45 slides from Indostar Capital Finance's earnings presentation, Oct 31, 2018
Slide 1: IndoStar Capital Finance Limited Q2 FY19 Results Update
INDOSTAR CAPITAL FINANCE LIMITED Q2 FY19 Results Update 31st October 2018
Slide 2: 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 3: Discussion Summary
Discussion Summary Quarterly Results Business Strategy & Performance Company Overview Shareholding Structure
Slide 4: Q2 FY19: Key Highlights
Q2 FY19: Key Highlights Retail AUM: ₹ 29,000 Mn [+203% YoY, +31% QoQ] Retail asset book 37% of total AUM Retailisation strategy on track SME business already profitable; VF & HF seeing good revenue traction Well-capitalised, Low Leverage – Strong Tier 1 CRAR of 30.6% headroom for growth De
Slide 5: Q2 FY19: Business Outlook
Q2 FY19: Business Outlook Tight liquidity for NBFCs and HFCs driving increase in yield on assets and in funding cost Strong demand for Retail finance products Vehicle scrapping policy for Commercial Vehicles expected to increase demand for Vehicle Financing Mass Housing to sustain demand in
Slide 6: Q2 FY19: Consolidated Profit & Loss Statement
Q2 FY19: Consolidated Profit & Loss Statement Particulars (₹ Mn) Q2 FY19 Q1 FY19 QoQ % Q2 FY18 YoY % H1 FY19 H1 FY18 YoY% Revenue from Operations 3,245 2,343 38% 1,995 63% 5,588 3,830 46% Interest Expenses 1,404 1,119 25% 740 90% 2,523 1,507 67% Net Interest Income 1,841 1,224 50% 1,255 47% 3,065 2,
Slide 7: H1 FY19: Financial Performance
H1 FY19: Financial Performance Phase 1 of Retail Lending business rollout completed - 155 branches operational - 1,545 employees on board in retail businesses Significant investment made in people & infrastructure; Opex increased 61% to ₹ 779 Mn Monthly retail disbursements increased from ₹ 1,
Slide 8: Q2 FY19: Consolidated Balance Sheet
Q2 FY19: Consolidated Balance Sheet Particulars (₹ Mn) Q2 FY19 Q1 FY19 QoQ% Q2 FY18 YoY% Equity 29,099 28,684 1% 20,279 43% Borrowings 58,032 54,370 7% 31,934 82% Others 592 2,163 -73% - - Total Liabilities 87,723 85,217 -64% 52,213 125% Loan Assets 77,665 74,701 4% 44,140 76% Treasury Assets 9,330
Slide 9: Q2 FY19: Business Segment Performance
Q2 FY19: Business Segment Performance Corporate SME Vehicle Housing Particulars (₹ Mn) Consolidated^ Lending Finance Finance Finance Revenue from Operations 2,206 539 231 75 3,245 Interest Expenses 836 284 89 41 1,404 Net Interest Income 1,370 255 141 33 1,841 Salary 67 56 119 93 456 Operating Expen
Slide 10: H1 FY19: Business Segment Performance
H1 FY19: Business Segment Performance Corporate SME Vehicle Housing Particulars (₹ Mn) Consolidated^ Lending Finance Finance Finance Revenue from Operations 3,820 965 331 106 5,588 Interest Expenses 1,559 514 127 57 2,523 Net Interest Income 2,262 451 204 49 3,065 Salary 110 110 214 154 779 Operatin
Slide 11: Q2 FY19: Diversified Funding Profile
Q2 FY19: Diversified Funding Profile Funding Mix % - June 2018 (₹ Mn) Funding Mix % - September 2018 (₹ Mn) Equity, Equity, 29,093 28,684 CP & Others, 6,638 33% 35% CP & Others, 8% 11,924 15% NCD, Banks, 19,798 Banks, NCD, 21,632 24% 25,840 25,550 26% 30% 29% Proportion of Commercial Paper and Short
Slide 12: Q2 FY19: Diversified Liability Profile
Q2 FY19: Diversified Liability Profile Overall Cost of Borrowing (COB %) Strong Credit Ratings 9.0% 9.2% 8.9% 9.0% 9.3%* Borrowing Type Rating Firm FY18 - Ratings Term Loans INDIA RATINGS / CARE AA (–) Redeemable NCDs INDIA RATINGS / CARE AA (–) CPs CRISIL / CARE / ICRA A1 (+) Q2 FY18 Q3 FY18 Q4 FY1
Slide 13: Q2 FY19: Comfortable Liquidity Position
Q2 FY19: Comfortable Liquidity Position Positive ALM month on month, in FY 19 and FY 20 Particulars (₹ Mn) Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 FY20 Opening Cash & Cash Equivalents * 12,673 10,622 9,497 8,927 9,125 9,199 8,095 Loan Repayment Inflows (Principal) 460 1,090 1,210 660 670 1,390 19,
Slide 14: Discussion Summary
Discussion Summary Quarterly Results Business Strategy & Performance Company Overview Shareholding Structure
Slide 15: Our Strategic Priority: Build A Well-Balanced & Diversified Lending Institution
Our Strategic Priority: Build A Well-Balanced & Diversified Lending Institution Dream. Drive. Deliver. To build a profitable, diversified Become the “Go-To” NBFC Growth, Asset Quality, & asset book for Middle India Profitability Continue to grow profitable corporate Be a catalyst in our customer
Slide 16: Q2 FY19: Encouraging Quarterly Performance Trend (1/2)
Q2 FY19: Encouraging Quarterly Performance Trend (1/2) Consolidated Financials AUM (₹ Mn) Loan Disbursements (₹ Mn) 77,665 21,830 22,606 74,701 60,595 50,435 14,694 44,140 13,048 11,766 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Spread Analysis (%) Cost to Income
Slide 17: Q2 FY19: Encouraging Quarterly Performance Trend (2/2)
Q2 FY19: Encouraging Quarterly Performance Trend (2/2) Consolidated Financials NPA (%)* PAT (₹ Mn) 1.9% 694 1.7% 640 1.3% 1.2% 0.9% 394 405 1.6% 1.4% 315 1.1% 1.0% 0.6% Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 GNPA % NNPA % Net worth (₹ Mn) Return Ratios^ & Cap
Slide 18: Corporate Lending (1/3)
Corporate Lending (1/3) Gross Disbursements (₹ Mn) Corporate Lending AUM (₹ Mn) 52,519 48,665 16,106 15,351 44,327 38,533 34,565 11,299 8,772 4,127 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 AUM Breakup: RE vs. Non-RE 43.9% 45.8% 53.6% 48.1% 46.2% 56.1% 54.2% 51.
Slide 19: Corporate Lending: Strong profitability (2/3)
Corporate Lending : Strong profitability (2/3) Particulars (₹ Mn) Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Interest Income 1,589 1,461 1,577 1,614 2,206 Interest Expenses 536 522 627 722 836 Net Interest Income 1,053 939 950 892 1,370 Salary 69 65 53 44 67 Operating Expenses 5 5 1 1 - Profit before C
Slide 20: Corporate Lending: Key ratios (3/3)
Corporate Lending : Key ratios (3/3) Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Interest Income * 16.1% 15.2% 14.4% 13.2% 14.4% Net Interest Income* 11.1% 9.9% 8.9% 7.4% 10.4% Consistent growth and profitability Operating Expenses* 0.8% 0.7% 0.5% 0.4% 0.5% Strong Asset Quality – zero credit losses
Slide 21: Retailisation Strategy Continues with Strong Momentum
Retailisation Strategy Continues with Strong Momentum Rising Proportion of Retail Lending in the Overall AUM and Disbursements AUM: CL vs Retail (%) Disbursements: CL vs Retail (%) 44,140 50,435 60,595 74,701 77,665 11,766 14,694 21,830 22,606 13,048 22% 24% 25.4% 23% 26% 27% 30% 32% 37% 68% 78% 76%
Slide 22: Strong Traction Witnessed Across All Retail Segments
Strong Traction Witnessed Across All Retail Segments Retail AUM (₹ Mn) Retail Disbursements (₹ Mn) 29,000 8,921 7,100 22,182 7,170 3,674 3,981 3,311 5,636 16,268 2,804 1,757 1,290 1,158 512 1,681 11,902 374 145 140 3,395 1,294 9,575 2,994 143 4 5 144 18,589 16,444 14,466 4,104 11,617 3,566 9,571 2,9
Slide 23: Rapid Rollout of Retail Branch Network
Rapid Rollout of Retail Branch Network Phase 1 of Retail Business roll-out completed 155 Branches Across 17 States Significant investments in people & infrastructure Early Identification and Rapid Branch Expansion 155 129 * Some branches have multiple operating segments 91 136 39 114 75 60 10 31
Slide 24: SME Business is Profitable (1/3)
SME Business is Profitable (1/3) SME Finance – Monthly Disbursement Trend (₹ Mn) 1,516 1,467 1,257 1,332 1,244 1,202 1,177 1,111 1,124 1,035 921 829 746 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 April-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 SME Business is already profitable; Achieved profita
Slide 25: SME Business is Profitable (2/3)
SME Business is Profitable (2/3) Particulars (₹ Mn) Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Revenue from Operations 277 311 346 425 539 Interest Expenses 124 150 193 230 284 Net Interest Income 153 161 152 196 255 Salary 59 57 39 53 56 Operating Expenses 13 23 21 20 21 Profit before Credit Cost 81 8
Slide 26: SME Business: Key ratios (3/3)
SME Business : Key ratios (3/3) Branches & Employees Q2 Q3 Q4 Q1 Q2 ROAA Tree (%) FY18 FY18 FY18 FY19 FY19 Interest Income* 12.4% 11.8% 10.8% 11.2% 12.3% 60 64 65 77 76 Net Interest Income* 7.1% 6.0% 4.5% 5.0% 5.7% 10 10 10 10 10 Operating Expenses* 3.3% 3.0% 1.9% 1.9% 1.8% Profit before Credit 3.8%
Slide 27: Vehicle Finance Is Scaling Up (1/4)
Vehicle Finance Is Scaling Up (1/4) Vehicle Finance – Monthly Disbursement Trend (₹ Mn) 1,305 1,186 1,183 1,076 971 758 568 368 223 Jan-18 Feb-18 Mar-18 April-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Commenced VF disbursements in December 2017 Consistent monthly growth in AUM and disbursements Ph
Slide 28: Vehicle Finance Is Scaling Up (2/4)
Vehicle Finance Is Scaling Up (2/4) Particulars (₹ Mn) Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Revenue from Operations - - 25 101 231 Interest Expenses - 1 9 38 89 Net Interest Income - - 16 63 141 Salary 10 32 77 95 119 Operating Expenses - 11 49 107 108 Profit before Credit Cost -10 -43 -110 -139
Slide 29: Vehicle Finance: Key ratios (3/4)
Vehicle Finance : Key ratios (3/4) Branches & Employees Q2 Q3 Q4 Q1 Q2 ROAA Tree(%) FY18 FY18 FY18 FY19 FY19 1,030 Interest Income* n.a. n.a. 16.8% 15.8% 17.2% 883 604 Net Interest Income* n.a. n.a. 10.5% 9.9% 10.6% 136 255 114 20 75 Operating Expenses* n.a. n.a. 84.7% 31.7% 16.9% Profit before Cred
Slide 30: Vehicle Finance: Encouraging Operational Metrics (4/4)
Vehicle Finance : Encouraging Operational Metrics (4/4) Average Monthly Disbursement by Branch Vintage (₹ Mn) Gross Monthly Disbursement by Branch Vintage (₹ Mn) 12 13 13 274 287 274 12 1214 245 268 11 11 14 14 13 225 13 211 280 250 252 261 11 12 241 11 11 196 10 10 10 137 8 175 104 7 6 7 8 123 129
Slide 31: Housing Finance Business Volumes are Trending Well (1/3)
Housing Finance Business Volumes are Trending Well (1/3) Housing Finance – Monthly Disbursement Trend (₹ Mn) 570 601 564 510 398 331 255 110 9 Jan-18 Feb-18 Mar-18 April-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Consistent month-over-month growth in AUM and disbursements Phase 1 of branch expansion
Slide 32: Housing Finance Business Volumes are Trending Well (2/3)
Housing Finance Business Volumes are Trending Well (2/3) Particulars (₹ Mn) Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Revenue from Operations - 1 9 31 75 Interest Expenses - 1 4 16 41 Net Interest Income - - 5 15 33 Salary 15 27 47 62 93 Operating Expenses 2 4 12 13 30 Profit before Credit Cost -18 -3
Slide 33: Housing Finance: Key ratios (3/3)
Housing Finance : Key ratios (3/3) Branches & Employees Q2 Q3 Q4 Q1 Q2 ROAA Tree(%) FY18 FY18 FY18 FY19 FY19 Interest Income* n.a. 15.4% 15.0% 12.5% 12.4% 391 418 341 Net Interest Income* n.a. 5.5% 8.4% 6.1% 5.5% 46 137 40 Operating Expenses* n.a. 406.7% 100.8% 30.1% 20.4% 31 33 Profit before Credit
Slide 34: Discussion Summary
Discussion Summary Quarterly Results Business Strategy & Performance Company Overview Shareholding Structure
Slide 35: Quick Snapshot
Quick Snapshot 1. First Indian NBFC 6. Robust Risk Management & promoted by Global PE Investors Scalable Technology Platform • Incorporated in 2011, sponsored by Everstone • Strong credit underwriting processes Capital and other marque investors • Active Board oversight • Listed on NSE & BSE in May-
Slide 36: Unique Combination of NBFC + HFC for 'Middle India'
Unique Combination of NBFC + HFC for ‘Middle India’ NBFC + HFC Combination Presence in Segments With Strong Growth Potential • Corporate Lending – High ROA Focus on Profitable • Vehicle finance – High ROA & Leverage Growth and ROE • SME Finance – Moderate Leverage Enhancement • Housing finance – Hig
Slide 37: Retail Lending: Focus on High Growth Segments
Retail Lending: Focus on High Growth Segments Commenced Retail Lending in 2015 with Focus on High Growth Segments Vehicle Finance To Be The Primary Growth Engine, While Housing Finance And SME Finance To Offer Strategic Leverage SME Finance Housing Finance Vehicle Finance • Commenced in FY 2016 • Co
Slide 38: 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 (8.8% of diluted shares) 30+ years
Slide 39: 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 40: 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 41: 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 42: Discussion Summary
Discussion Summary Quarterly Results Business Strategy & Performance Company Overview Shareholding Structure
Slide 43: Promoters Shareholding Structure
Promoters Shareholding Structure Everstone1 48.00 % 57.02% Indostar Capital3 100.0% (Promoter) IndoStar Capital Finance Limited 52.00 % Promoter Group4 Other Investors2 2.28% Strong capital sponsorship of Everstone Group 6 India and SEA US$4.0bn ‘Private Equity Firm of the Year in India’ focused AuM
Slide 44: Shareholding Pattern
Shareholding Pattern Shareholding @ 30 Sept 2018 Major Shareholders Promoter & Promoter Group Management Team and Employees* Foreign SBI MF Company Body Trusts 2.5% Lenarco (Advent) Corporates 1.5% 5.3% ICICI Prudential Life Insurance Others Fidelity Emerging Markets Fund 8.1% HDFC MF SBI Amundi Fun
Slide 45: For Further Queries
For Further Queries Pankaj Thapar Nilesh Dalvi CFO IR Consultant Contact No: +91 22 4315 7036 Contact No: + 91 9819289131 Email – pthapar@indostarcapital.com Email – nilesh.dalvi@dickensonir.com Rajagopal Ramanathan Ravindra Bhandari IRO IR Consultant Contact No: +91 22 4315 7068 Contact No: 9283614
IndoStar Capital Finance — Q2 FY19 Earnings Presentation on 6ix