Poonawalla Fincorp Limited · NSE:POONAWALLA
Poonawalla Fincorp — Q3 FY2024 Earnings Presentation
47 slides from Poonawalla Fincorp's earnings presentation, Jan 18, 2024
Slide 1: Cover letter to stock exchanges on investor presentation
January 18, 2024 BSE Limited National Stock Exchange of India Limited Corporate Relationship Department The Listing Department, 25th Floor, Phiroze Jeejeebhoy Towers, Exchange Plaza, Dalal Street, Fort, Bandra- Kurla Complex, Bandra (East), Mumbai - 400 001. Mumbai - 400 051. BSE Scrip Code: 524000
Slide 2: Poonawalla Fincorp Limited Investor Presentation Q3FY24
Poonawalla Fincorp Limited Investor Presentation Q3FY24 Scalable Business Model | Pure Retail Play | Digital-First Tech-Led | Customer Centric
Slide 3: Agenda
Agenda 1 Overview & Executive Summary 2 2 Our Business Model 6 3 Strategy Execution 18 4 Business & Financial Highlights 32 5 Digital Transformation 38 6 Board Members and Awards & Accolades 40 2
Slide 4: Q3FY24 Performance
Q3FY24 Performance Excellent Quarter on All Fronts Differentiated strategy and execution excellence led to all round performance across business growth, credit quality & profitability Highest ever quarterly disbursement AUM Disbursement ₹ 21,946 crore ₹ 8,731 crore +58% YoY | +9% QoQ +159% YoY | +12
Slide 5: Executive Summary
Executive Summary Setting the momentum for expanding growth horizon Strong Business Momentum Continues in Q3FY24 ▪ Highest ever disbursement of ₹ 8,731 crore ▪ Consistent increase in disbursement: Up 159% YoY & 12% QoQ ▪ AUM at ₹ 21,946 crore with a growth of 58% YoY & 9% QoQ Strengthened Distributi
Slide 6: Executive Summary
Executive Summary Setting the momentum for expanding growth horizon Robust Asset Quality ▪ GNPA & NNPA reduced to 1.33% and 0.70% respectively compared to 1.36% & 0.72% in Q2FY24 and as compared to 1.69% & 0.89% in Q3FY23 ▪ Provision Coverage Ratio (PCR %) stood at 47.33% Rise in Profitability – Q3F
Slide 7: Agenda
Agenda 1 Overview & Executive Summary 2 2 Our Business Model 6 3 Strategy Execution 18 4 Business & Financial Highlights 32 5 Digital Transformation 38 6 Board Members and Awards & Accolades 40 6
Slide 8: Poonawalla Fincorp's Digital-First Tech-led Model - Demystified
Poonawalla Fincorp’s Digital-First Tech-led Model - Demystified Low cost of funds and Low Opex enabling Poonawalla Fincorp to target low risk - credit tested Prime and Super Prime customers thereby resulting in lower credit cost Low Higher Low Low Low Cost of Risk Operating Cost Risk Customers Credi
Slide 9: Customer's Problem Statement and Persona
Customer’s Problem Statement and Persona An illustration Rajiv, a 34-year-old businessman from Pune, runs a manufacturing unit since last 8 years from rented premise. He has an annual turnover of ₹ 3 crore, stays in his owned house and pays GST on time. He is tech savvy, uses internet banking, activ
Slide 10: Customer Dilemma – Where is my lender of choice?
Customer Dilemma – Where is my lender of choice ? Large NBFC with Poonawalla Parameters Traditional Bank Traditional NBFC Digital Capability Fintech NBFC Fincorp Loan Amount Flexibility No Yes Yes No Yes Collateral Free No Yes Yes Yes Yes Quick Turnaround Time No No Yes Yes Yes 100% Digital Process
Slide 11: What Differentiates Us?
What Differentiates Us? • Led by Abhay Bhutada, an entrepreneur at • AAA Rated the top • Well Capitalized Entrepreneur • Built a pool of next level leaders and a • Excellent portfolio quality at top culture of innovation and entrepreneurial • Strong well diversified book mindset Strong Digital Nativ
Slide 12: Differentiated Business Model
Differentiated Business Model Non-Conventional & Branch-lite model Strong Leadership and Management • We have well defined, digital-led and branch lite • Poonawalla Fincorp is backed by Cyrus Poonawalla model that differentiates us from the conventional Group, which is cash rich, net debt free and o
Slide 13: Our customer segment is unique and better than other lenders
Our customer segment is unique and better than other lenders Product Market Credit Tested Bureau Score Professional Use Urban Credit Tested 700+ Consumption related Semi Urban New To Credit 650+ Commercial Use Rural 600+ Ticket Size Income Assessment Income Document Pricing Top Quartile Verified Inc
Slide 14: Where is differentiation getting reflected?
Where is differentiation getting reflected? AUM Growth Portfolio Quality Operating Efficiency Digital Reach Customer Satisfaction Consistent Best-in-class GNPA Consistent reduction Increased customer Improvement in NPS QoQ & NNPA in Opex ratio acquisition We have built an engine that is Scalable Sus
Slide 15: Risk Management integrated into the strategy
Risk Management integrated into the strategy • Prime & Super Prime Segment • Bureau Score 700+ • Demonstrated credit behavior • Time maturity model • Credit risk optimized • Better customer understanding Credit Tested • X-Sell & Up-Sell optimized Customers Digital • Bureau Data Start Small • Banking
Slide 16: Transformation journey so far
Transformation journey so far Dec-20 (Legacy Magma) Dec-23 (Poonawalla Fincorp) Parameters (Standalone) (Pre-Acquisition) (Post-Acquisition) Assets Under Management (AUM) ₹ 11,631 crore ₹ 21,946 crore Cost of Borrowing (%) 9.64% 7.99% GS3/Gross NPA (%)1 8.23% 1.33% NS3/Net NPA (%) 1 5.35% 0.70% Retu
Slide 17: Short Term Personal Loan (STPL) – Industry & PFL Overview
Short Term Personal Loan (STPL) – Industry & PFL Overview Fintechs 1. New to Credit 2. Low Tenure Fintechs + NBFCs < 25K 3. High Interest Rates 1. Repeat customers > 25K to 4. High Processing fees 2. Medium Tenure 50 K 3. High Interest Rates 4. High Processing fees >50 K Large NBFCs + Mid-size Banks
Slide 18: How we are growing and the road ahead
How we are growing and the road ahead Portfolio Mix Tenure Mix Secured Portfolio 52% Short Term (Upto 12 mths) 22% Current Unsecured Portfolio 48% Medium & Long Term (>12 mths) 78% Secured Portfolio 50% Short Term (Upto 12 mths) 20 - 25% Road Ahead Unsecured Portfolio 50% Medium & Long Term (>12 mth
Slide 19: Agenda
Agenda 1 Overview & Executive Summary 2 2 Our Business Model 6 3 Strategy Execution 18 4 Business & Financial Highlights 32 5 Digital Transformation 38 6 Board Members and Awards & Accolades 40 18
Slide 20: Scalable Business Model to Drive Profitable Growth
Scalable Business Model to Drive Profitable Growth Inherent Strengths… Brand Strength & Strong Management Digital First and Technology Led Target Market Aligned Distribution & Products Flagship financing arm of Cyrus Poonawalla Digitalized end to end processes Unique sourcing model with mix of Direc
Slide 21: Management Vision 2025
Management Vision 2025 Performance well ahead of long-term guidance Vision 2025 On the right track (Q3FY24 status) To be amongst the Top 3 NBFCs in consumer and Product diversification to have large presence in MSME segment chosen segments. Leadership in select products achieved Risk-calibrated acce
Slide 22: Long Term Guidance on Financial Metrics
Long Term Guidance on Financial Metrics Profitable Growth with Best-in-Class Asset Quality AUM Growth Profit Growth GNPA 35-40% 30-35% 1.3-1.8% NNPA Return on Assets 0.5-0.9% 4-4.5% 21
Slide 23: Successfully Executing our Strategic Plan
Successfully Executing our Strategic Plan 1 Differentiating by Offering Superior Customer Value 2 Aligning Distribution & Products that Suits Target Market 3 Digital-First, Technology-Led to the Core 4 Upholding Robust Credit Quality 5 Continuously Optimizing Cost of Borrowing & Liquidity 6 Future R
Slide 24: Differentiating by Offering Superior Customer Value
1a Differentiating by Offering Superior Customer Value To ensure sustainable growth & leadership in chosen segments ₹ crore Accelerated disbursement growth 5.5x 8,731 7,063 7,807 6,371 3,110 3,369 2,379 1,600 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Minimal paperwork, reduced human in
Slide 25: Diversified Assets Under Management
1b Diversified Assets Under Management Contribution ₹ crore MSME Lending (Secured + Unsecured) 9,194 42% Loan Against Property 3,650 17% Personal and Consumer 3,403 • Pure retail portfolio with focus 16% on MSME and Consumer segment. Pre-owned Car 3,172 14% • AUM well diversified across products, ge
Slide 26: Distribution: In Sync with Emerging Business Models
2a Distribution: In Sync with Emerging Business Models Direct Digital Program (DDP) led distribution model Digital Channel Direct Channel Digital ecosystem In-house sourcing of In-house sourcing of Multiple tie-ups, alliances & customers through app, web, DDP Distribution customers through branches
Slide 27: Product Suite: Tailored for the Target Segment
2b Product Suite: Tailored for the Target Segment Focus on Consumer & MSME segment with diversified offerings Existing products Upcoming products Pre-owned Cars Digital Business Loans Machinery Loan Co-branded Credit Card* *RBI approval received Merchant Cash Advance Digital Personal Loan Digital Co
Slide 28: Digital-First, Technology-Led to the Core
3a Digital-First, Technology-Led to the Core Leading to competitive moat, efficient operations & sustained growth Deep Investments in Technology Building a Tech led Play Customers Partners Self service online web application Extended API Infrastructure Core Contact center, app led digital onboarding
Slide 29: Digital Transformation Yielding Results
3b Digital Transformation Yielding Results End to End Digitalized Lending – Lower TATs, Minimal Paperwork, Reduced human intervention ▪ End to end digital journey capability for customers across all products via Digital KYC, Digital Onboarding (e-sign, e-agreement & e-Nach), Automated BRE for quick
Slide 30: Upholding Robust Credit Quality
4 Upholding Robust Credit Quality Consistent outperformance on Asset Quality GS3 / GNPA* (%) NS3 / NNPA* (%) 3.29 2.68 1.30 1.11 1.77 1.69 0.94 0.89 1.44 1.42 1.36 1.33 0.78 0.76 0.72 0.70 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
Slide 31: Optimizing Cost of Borrowing & Liquidity Position
Classification | INTERNAL 5 Optimizing Cost of Borrowing & Liquidity Position Despite hardening of rates and tight liquidity, maintained avg. CoB at same level q-o-q Average Cost of Borrowing (PFL) 8.00% 8.04% 7.98% 7.99% 7.90% 7.54% 7.54% 7.16% 6.97% Repo rate hike → Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3F
Slide 32: Future Ready Human Capital with Strong Leadership
6 Future Ready Human Capital with Strong Leadership Building the Right Culture with focus on Productivity Productivity & Operational Employee Development Efficiency Engagement Rewards • Collaboration Meet to drive • Well defined development • AI enabled connect • My Branch, My Pride cohesiveness pla
Slide 33: Agenda
Agenda 1 Overview & Executive Summary 2 2 Our Business Model 6 3 Strategy Execution 18 4 Business & Financial Highlights 32 5 Digital Transformation 38 6 Board Members and Awards & Accolades 40 32
Slide 34: Performance Parameters
Performance Parameters Robust growth continues | Significant reduction in GNPA & NNPA ₹ crore Disbursement AUM Net-worth 21,946 8,075 8,731 20,215 7,781 7,807 7,063 17,776 6,371 16,143 13,929 6,649 13,161 6,425 12,606 6,212 3,110 3,369 6,018 2,901 5,878 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY
Slide 35: ALM statement and Liquidity
ALM statement and Liquidity Structural Liquidity Statement as on December 31, 2023 Cumulative inflows (₹ in Cr) Cumulative outflows(₹ in Cr) 25,085 25,085 22,389 20,265 16,560 14,223 14,140 11,070 8,418 9,174 6,361 3,754 3,280 3,954 1,926 2,648 1,289 917 96 162 1-7d 8 - 14d 0-1m 1-2m 2-3m 3-6m 6m-1y
Slide 36: Asset Quality
Asset Quality Significant improvement on sustained basis Particulars Dec-22 Sep-23 Dec-23 Gross NPA (₹ crore) 223 266 275 Net NPA (₹ crore) 117 140 145 Gross NPA (%) 1.69% 1.36% 1.33% Net NPA (%) 0.89% 0.72% 0.70% Provision Coverage Ratio (%) 47.77% 47.17% 47.33% % of on-book AUM 35
Slide 37: Profit & Loss Statement
Profit & Loss Statement Particulars (₹ crore) Q3FY23 Q2FY24 Q3FY24 YoY QoQ Total Income 519 745 774 49% 4% Interest Expenses 159 216 224 40% 4% Operating Expenses 204 194 200 -2% 3% Operating Profit 156 336 350 125% 4% Credit Cost -45 28 -7 - - Profit after Tax 150 230 265 76% 15% Profit after Tax 1
Slide 38: Balance Sheet
Balance Sheet Particulars (₹ crore) 31-Dec-22 31-Dec-23 YoY Cash & Bank Balances 99 198 100.3% Receivables 23 66 187.5% Loans 12,883 19,415 50.7% Investments 1,138 538 -52.8% Other Financial Assets 470 547 16.4% Non-Financial Assets 514 468 -8.9% Total Assets 15,127 21,232 40.4% Borrowings 8,418 12,
Slide 39: Agenda
Agenda 1 Overview & Executive Summary 2 2 Our Business Model 6 3 Strategy Execution 18 4 Business & Financial Highlights 32 5 Digital Transformation 38 6 Board Members and Awards & Accolades 40 38
Slide 40: Digital Transformation
Digital Transformation We have successfully completed Phase 1 & Phase 2 of technology transformation enabling: • Launch of multiple new products as per our stated strategy • A stable and scalable digital platform • Superior experience to our customers Phase 2 of technology transformation has further
Slide 41: Agenda
Agenda 1 Overview & Executive Summary 2 2 Our Business Model 6 3 Strategy Execution 18 4 Business & Financial Highlights 32 5 Digital Transformation 38 6 Board Members and Awards & Accolades 40 40
Slide 42: Board of Directors - Poonawalla Fincorp
Board of Directors - Poonawalla Fincorp Experienced & Diversified Board Mr. Adar Poonawalla Mr. Abhay Bhutada Mr. Sunil Samdani Mr. Amar Deshpande Mr. Sajid Fazalbhoy Chairman & Managing Director Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Mr. Atul Kumar G
Slide 43: Awards and Accolades
Awards and Accolades Compliance and Legal Risk Management ‘Compliance and Awarded with Winner of ‘Golden Peacock Legal Team of the ‘Excellence in Award for Risk Management’ Year’ at UBS Forum’s Compliance and Legal at IOD India’s 2023 Annual 3rd edition of Future Management category’ London Global C
Slide 44: Launch of 'Log toh Sawaal Karenge Hi' Campaign
Launch of ‘Log toh Sawaal Karenge Hi’ Campaign Digital media campaign aimed at people with high credit score • Launched ‘Log toh Sawaal Karenge Hi’ campaign to throw light on how people end up taking loans at high interest and pay higher EMIs despite having good credit behaviour and high credit scor
Slide 45: Disclaimer
Disclaimer This presentation has been prepared by Poonawalla Fincorp Limited (the “Company”), for general information purposes only, without regard to any specific objectives, suitability, financial situations and needs of any particular person and does not constitute any recommendation or form part
Slide 46: Disclaimer (Continued)
Disclaimer (Continued) The information contained in these materials has not been independently verified. Neither the Company, its directors, promoter affiliates, nor any of its or their respective employees, advisers or representatives or any other person accepts any responsibility or liability what
Slide 47: Thank You
THANK YOU Team – Investor Relations Investor.relations@poonawallafincorp.com