Five-star Business Finance Limited · NSE:FIVESTAR
Five-star Business Finance — Q1 FY2025 Earnings Presentation
58 slides from Five-star Business Finance's earnings presentation, Jul 31, 2024
Slide 1: Covering letter to stock exchanges
Date: July 31, 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 Financial
Slide 2: Five-Star Business Finance Investor Presentation Q1FY2025
Reaching the Unreached Five-Star Business Finance Limited Investor Presentation | Q1FY2025 STRICTLY PRIVATE AND CONFIDENTIAL
Slide 3: Safe Harbour
Safe Harbour Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 – Q1FY25 ▪ 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 – Q1FY25 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 | Q1FY25
Executive Summary | Q1FY25 Five-Star Business Finance Limited | Investor Presentation – Q1FY25 q-o-q y-o-y Branches Loan Disbursement Loan Portfolio 547 ₹ 13,182 Mn ₹ 103,439 Mn +27 +161 -1% +16% +7% +36% Gross NPA 30+ DPD Profit After Tax 1.41% 8.11% ₹ 2,516 Mn +3 bps +0 bps +0.22% -1.57% +7% +37%
Slide 8: Q1FY25 Performance – At a glance
Q1FY25 Performance – At a glance Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Scale of Distribution Granular Book Asset Quality Liability Profile Profitability Operations ₹103.4bn / ₹75.8bn 547 100% Secured 1.41% 42 ₹2.5bn / ₹1.8bn AUM in Q1FY25 / Q1FY24 Number of Branches Loa
Slide 9: Strong Financial Performance over the years
Strong Financial Performance over the years Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 10: Distinguished Board of Directors
Distinguished Board of Directors Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Promoter Director Lakshmipathy Deenadayalan Chairman & Managing Director Independent Directors Select other Directorships Anand Raghavan T T Srinivasaraghavan Bhama Krishnamurthy Ramkumar Ramamoorthy
Slide 11: Profile of Board of Directors
Profile of Board of Directors Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Anand Raghavan T T Srinivasaraghavan Independent / Non-Executive Director Independent / Non-Executive Director Lakshmipathy Deenadayalan Chairman & Managing Director Chartered Accountant with over 30 ye
Slide 12: Experienced Management Team
Experienced Management Team Five-Star Business Finance Limited | Investor Presentation – Q1FY25 NA 22 21 9 22 9 22 7+ Lakshmipathy Deenadayalan Rangarajan Krishnan Srikanth Gopalakrishnan Vishnuram Jagannathan Chairman & MD CEO CFO Chief Operating Officer Education: Bachelor of Engineering Education
Slide 13: Business Updates
BUSINESS UPDATES
Slide 14: Business Updates (1/2)
Business Updates (1/2) Five Star Business Finance Limited | Investor Presentation – Q1FY25 Operations 1. Net Q-o-Q AUM growth of ₹7,033 Mn in Q1FY25 as against ₹6,685 Mn in Q1FY24. AUM was up 36% Y-o-Y at ₹103,439 Mn as of June 30, 2024 as against ₹75,833 Mn as of June 30, 2023. 2. Disbursements dur
Slide 15: Business Updates (2/2)
Business Updates (2/2) Five Star Business Finance Limited | Investor Presentation – Q1FY25 Liabilities 1. In Q1FY2025, the company received sanctions for incremental debt of ₹8,500 Mn, availing ₹8,250 Mn (inclusive of some un-availed sanctions from previous quarters), at a weighted average rate of i
Slide 16: Balance Sheet Indicators
Balance Sheet Indicators Five Star Business Finance Limited | Investor Presentation – Q1FY25 Quarterly Data Last 5 years data All amounts in ₹ Mn Disbursements AUM Net Worth Disbursements 16% 20% 48,814 36% 13,364 13,182 1,03,439 54,498 96,406 51,962 33,914 11,318 45,265 24,087 75,833 17,562 7% 5% 1
Slide 17: P&L Indicators
P&L Indicators Five Star Business Finance Limited | Investor Presentation – Q1FY25 Quarterly Data Last 5 years data All amounts in ₹ Mn Income Interest Expense Other Expenses Income 38% (24%) 21,951 (64%) 6,694 1,582 1,565 6,191 1,488 15,289 1,377 1,264 12,562 4,836 10,513 7,873 962 (15%) (5%) 8% Q1
Slide 18: Consistent & Best-in-class Spreads
Consistent & Best-in-class Spreads Five Star Business Finance Limited | Investor Presentation – Q1FY25 Portfolio Yield Cost of borrowing Spread 25.0% 12.0% 25.0% 14.0% 24.3% 24.4% 24.3% 24.5% 24.2% 24.2% 24.2% 24.2% 24.3% 13.5% 24.5% 24.2% 24.2% 24.1% 24.2% 11.5% 24.0% 24.0% 13.0% 23.5% 23.5% 12.5%
Slide 19: Well-diversified portfolio cuts
Well-diversified portfolio cuts Five Star Business Finance Limited | Investor Presentation – Q1FY25 AUM by Geography AUM by Ticket Size Q1FY25 1% 1% Q1FY24 Q1FY25 1% 0% Q1FY24 1% 0% 5% 5% 11% 6% 6% 10% 30% 34% 35% ATS for ATS for 42% 19% 20% Q1FY25 Q1FY24 3.52L 3.36L 46% 52% 38% 34% TN AP TS KA MP O
Slide 20: Asset Quality & ECL
ASSET QUALITY & ECL ' weil
Slide 21: Asset Quality Indicators (1/2)
Asset Quality Indicators (1/2) Five Star Business Finance Limited | Investor Presentation – Q1FY25 Collections Efficiency (%) 30+ (%) 9.68 1.41 8.59 8.35 8.11 7.89 1.35 1.40 1.38 1.41 100.3 8.27 99.6 97.5 98.0 99.1 97.5 99.5 97.8 98.5 97.2 7.24 6.95 6.51 6.71 Jun'23 Sep'23 Dec'23 Mar'24 Jun'24 Jun'2
Slide 22: Asset Quality Indicators (2/2)
Asset Quality Indicators (2/2) Five Star Business Finance Limited | Investor Presentation – Q1FY25 Amount in ₹ Mn As at Jun 2024 As at Mar 2024 As at Jun 2023 Bucket AUM % AUM AUM % AUM AUM % AUM Current (Stage-1) 89,696 86.71% 84,247 87.39% 64,281 84.77% 1-30 (Stage-1) 5,351 5.17% 4,555 4.72% 4,210
Slide 23: ECL Provisioning
ECL Provisioning Five Star Business Finance Limited | Investor Presentation – Q1FY25 Amount in ₹ Mn As of June 30, 2024 Stage 1 Stage 2 Stage 3 Total Loans Outstanding (Gross) 95,047 6,938 1,454 103,439 ECL Provision 380 552 757 1,689 Loans Outstanding (Net) 94,667 6,386 697 101,750 ECL Provision %
Slide 24: Lag NPA
Lag NPA Five Star Business Finance Limited | Investor Presentation – Q1FY25 Amount in ₹ Mn Q1FY2025 Q1FY2024 Q1FY2023 Q1FY2022 Loan Portfolio 103,439 75,833 52,965 45,794 Gross Stage 3 assets 1,454 1,072 591 767 Gross Stage 3 assets % 1.41% 1.41% 1.12% 1.68% Gross Stage 3 assets % - 1 year Lag 1.92%
Slide 25: Liability & ALM
LIABILITY & ALM
Slide 26: Well-diversified Liability Franchise (1/2)
Well-diversified Liability Franchise (1/2) Five Star Business Finance Limited | Investor Presentation – Q1FY25 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 27: Well-diversified Liability Franchise (2/2)
Well-diversified Liability Franchise (2/2) Five Star Business Finance Limited | Investor Presentation – Q1FY25 Diversified borrowing mix across lender category and product category Borrowing exposure and Cost of borrowing Borrowings 25,203 25,231 31,785 42,473 43,167 48,193 57,911 63,158 67,239 outs
Slide 28: Cashflow Position as of Jun'24 – Cumulative
Cashflow Position as of Jun’24 – Cumulative Five Star Business Finance Limited | Investor Presentation – Q1FY25 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 19,988 19,066 19,226 18,680 18,360 18,836 21,473 38,72
Slide 29: Strong Liquidity Position as of Jun'24
Strong Liquidity Position as of Jun’24 Five Star Business Finance Limited | Investor Presentation – Q1FY25 Amount in ₹ Mn Liquidity buffer as of Jun 2024 Unencumbered cash & cash equivalents 18,912 Unavailed sanction from banks / FIs 4,000 Total Liquidity 22,912 Projected Cashflow Schedule Q2FY25 Q3
Slide 30: Financial Statements
FINANCIAL STATEMENTS
Slide 31: Balance Sheet
Balance Sheet Five Star Business Finance Limited | Investor Presentation – Q1FY25 Particulars (₹ Mn) Q1FY2025 Q1FY2024 Q4FY2024 FY2024 FY2023 Assets Cash & Cash equivalents 15,405 8,435 15,344 15,344 13,404 Bank balances other than cash & cash equivalents 1,359 1,249 1,373 1,373 2,405 Loans1 104,289
Slide 32: Profit & Loss Account
Profit & Loss Account Five Star Business Finance Limited | Investor Presentation – Q1FY25 Particulars (₹ Mn) Q1FY2025 Q1FY2024 Q4FY2024 Y-o-Y Q-o-Q FY2024 FY2023 Y-o-Y Loan Portfolio 103,439 75,833 96,406 36% 7% 96,406 69,148 39% Interest Income (1) 6,411 4,637 5,992 38% 7% 21,166 14,988 41% - Inter
Slide 33: RoE Tree
RoE Tree Five Star Business Finance Limited | Investor Presentation – Q1FY25 Particulars Q1FY2025 Q1FY2024 Q4FY2024 FY2024 FY2023 Interest Income (as a % of average portfolio) 24.22% 24.44% 24.19% 24.27% 24.13% Interest Expenses (as a % of average borrowings) 9.65% 9.80% 9.64% 9.71% 10.12% Net Inter
Slide 34: Company Overview
COMPANY OVERVIEW
Slide 35: Our Journey
Our Journey Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 36: Who we are
Who we are Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 37: Current Shareholding
Current Shareholding Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Institutional Promoters Top 10 Institutional Investors (ex-PE and Promoter) 7.68% Investor name % stake* Individual Promoter Others 18.29% & Promoter Group Capital Research 2.98% 10.35% Ninety-One 2.92% AIF & QI
Slide 38: Growth Opportunity & Levers (1/2)
Growth Opportunity & Levers (1/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 39: Growth Opportunity & Levers (2/2)
Growth Opportunity & Levers (2/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 40: Customer & Product
Customer & Product Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 41: Distribution
Distribution Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Gradual growth in newer regions; significant ramp-up upon reaching the comfort state State-wise portfolio break-up No of 547 branches | 10 States / UT State Q1FY25 FY24 FY23 FY22 FY21 FY20 branches Added 27 branches dur
Slide 42: Robust Proprietary Underwriting (1/2)
Robust Proprietary Underwriting (1/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 43: Robust Proprietary Underwriting (2/2)
Robust Proprietary Underwriting (2/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 44: Strong on-ground Collections infrastructure (1/2)
Strong on-ground Collections infrastructure (1/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 45: Strong on-ground Collections infrastructure (2/2)
Strong on-ground Collections infrastructure (2/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 46: Technology Strategy (1/3)
Technology Strategy (1/3) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 47: Technology Strategy (2/3)
Technology Strategy (2/3) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 48: Technology Strategy (3/3)
Technology Strategy (3/3) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 49: Risk Management & Audit (1/2)
Risk Management & Audit (1/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 50: Risk Management & Audit (2/2)
Risk Management & Audit (2/2) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 51: ESG @ Five Star (1/5)
ESG @ Five Star (1/5) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 52: ESG @ Five Star (2/5)
ESG @ Five Star (2/5) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 53: ESG @ Five Star (3/5)
ESG @ Five Star (3/5) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 54: ESG @ Five Star (4/5)
ESG @ Five Star (4/5) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Strong Governance Framework Board of Directors 1 4 1 Promoter Director Independent Directors Non-Executive Director (including 1 Woman Director) Board Risk Management Nomination & Stakeholder Customer Corporate
Slide 55: ESG @ Five Star (5/5)
ESG @ Five Star (5/5) Five-Star Business Finance Limited | Investor Presentation – Q1FY25 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 56: Strong Human Capital
Strong Human Capital Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Strong & adequate Human Capital for the size and scale of operations Function No of employees Proportion of Headcount – Branch vs HO Business & Collections 6,223 5% - Relationship Officers 4,953 - Branch Manager
Slide 57: Key Differentiators
Key Differentiators Five-Star Business Finance Limited | Investor Presentation – Q1FY25 Deep Understanding of Customer Segment Compelling Economics & Best in Class & Conservative Lending Practices Return Metrics Industry Leading Asset Quality 20 years of operations Current yields of ~24%; Steady sta
Slide 58: 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 — Q1 FY2025 Earnings Presentation on 6ix