Indostar Capital Finance Limited · NSE:INDOSTAR
Indostar Capital Finance — Q3 FY2023 Earnings Presentation
55 slides from Indostar Capital Finance's earnings presentation, Feb 20, 2023
Slide 1: Stock exchange filing cover letter
ICFL/LS/0153/2022-23 20 February 2023 BSE Limited National Stock Exchange of India Limited Listing Department, 1st Floor, Exchange Plaza, C-1, Block G, P J Towers, Dalal Street, Fort, Bandra Kurla Complex, Bandra, Mumbai - 400 001. (E), Mumbai – 400 051. Scrip Code: 541336 Symbol: INDOSTAR Sub.: Inv
Slide 2: IndoStar Capital Finance Investor Presentation February 2023
INDOSTAR CAPITAL FINANCE Investor Presentation February 2023
Slide 3: Safe Harbor
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by IndoStar Capital 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: Key Performance Highlights – 9MFY23
Key Performance Highlights – 9MFY23 AUM Disbursements Gross Stage 3 Net Stage 3 CRAR Branches ₹ 7,669 crs ₹ 1,200 crs 7.9% 3.6% 33% CRAR 423 Branches Net Total Income PAT NIMs ₹ 463.2 crs ₹ 149.2 crs 6.2% 6.4% 770% 50 bps 3
Slide 5: IndoStar 2.0
IndoStar 2.0 :
Slide 6: "go-to" NBFC in Retail Lending
“go-to” NBFC in Retail Lending CV Finance Housing Finance Our wholly-owned subsidiary IndoStar Home We provide financing Finance engages in primarily for used, as well as providing affordable home for new, Commercial financing solutions to self- Vehicles employed and salaried customers SME Finance W
Slide 7: Strategy for INDOSTAR 2.0
Strategy for INDOSTAR 2.0 • Strengthened Core Management Team to focus on each of the business segments New Customer • Focused on serving the used CV market with higher yields Acquisition • Moving branch network into the hinterland, serving customers in tier 3 and tier 4 towns • Strengthened control
Slide 8: Exploring Opportunities in the Used CV Industry
Exploring Opportunities in the Used CV Industry Large CV Market: Second-hand truck financing INR 5.6 Lakh Crores under-penetrated, ~60% 336,521 270,553 279,903 331,486 391,544 450,416 516,089 with informal credit 13.3% 11.2% 15.2% 14.9% 14.3% 13.8% 19.4% 8% Market typically run Core focus of by priv
Slide 9: Commercial Vehicle Industry Trends & Market Forecast
Commercial Vehicle Industry Trends & Market Forecast Commercial Vehicle Unit Sales India (lakhs) CV Industry Trend Drivers & Expectations New Commercial Vehicles (CV) sales fell 45% over two years Units Sold Projections from 10.3L in FY’19 to 5.7L in FY’21, driven by a slowdown in economic growth in
Slide 10: Indian Affordable Housing Finance Market Expected To Show Significant Growth
Indian Affordable Housing Finance Market Expected To Show Significant Growth Ticket Size (Rs) Players in Indian Mortgage Market Increasing Penetration in LIG & EWS Segments to Drive Growth 69% 41% Average LTS Affordable Housing Market MIG & Comprises of loans with ticket 17.1 35% sizes less than Rs
Slide 11: Future Ready to Seize Affordable Housing Market Opportunity
Future Ready to Seize Affordable Housing Market Opportunity Management Team Geographical Focus Ecosystem Play › Seasoned management team › Geographical focus on South & › Remote access to customers supported by regional teams with West India with the cluster-based through HomeHub app conservative ba
Slide 12: Our Strategic Focus Areas
Our Strategic Focus Areas Maintaining consistent Investing in technology to Expanding Maintaining asset customer communication become more Agile & geographically quality Process Oriented Digitalization Strengthening controls Ensuring a robust Being agile and to minimize risk balance sheet future-rea
Slide 13: Strategic Performance Indicators
Strategic Performance Indicators
Slide 14: Key Target Areas
Key Target Areas Key Target Areas Plan Status • Opportunity to scale-up used CV disbursement due to both increased • Increase in Disbursement level from growth in used CV segment and our small base Q3 2022 Business • Leverage our existing reach by increasing penetration to field/site to • Targeting
Slide 15: Priority Sector Lending – Key Strategic Initiative
Priority Sector Lending – Key Strategic Initiative What is the RBI What is the qualifier to What are the priority What is the advantage guideline for Banks get an IndoStar loan sectors? to IndoStar? around PSL? tagged as PSL? Under RBI guidelines, loans given to 1) Domestic commercial banks Across t
Slide 16: Changing Portfolio Mix Driven by Retailisation Strategy
Changing Portfolio Mix Driven by Retailisation Strategy Break-up of Asset Under Management Retailisation Strategy Playing Out 12,054 10,150 8,990 9,658 8,247 7,908 7,669 16% Q3FY23 5,000 3,469 4,643 4,194 3,835 3,612 42% 4,908 46% 47% 47% 46% 45% 51% 84% 5% 551 8% 832 26% 1,899 11% 996 1,467 1,489 1
Slide 17: Retailisation Strategy Playing Out
Retailisation Strategy Playing Out Disbursements: CL vs Retail (₹ crs) Disbursements: Retail (₹ crs) 6,448 3,505 1,827 4,947 344 334 522 4,885 564 579 3,054 3,054 2,356 1,609 442 926 2,356 4,885 330 324 347 534 363 3,743 1,609 374 3,394 288 +34% 1,149 1,594 1,646 330 324 442 80 947 1 107 218 12 115
Slide 18: National Footprint Creating Runway for Growth
National Footprint Creating Runway for Growth No States 423 Branches Across 22 States 1 HIMACHAL PRADESH – 3 413 424 423 404 2 PUNJAB – 9 56 35 42 62 3 UTTARAKHAND – 9 343 1 24 65 67 75 73 4 HARYANA – 10 63 2 5 NEW DELHI – 3 3 4 6 UTTAR PRADESH- 31 5 304 304 293 288 7 RAJASTHAN – 29 256 6 14 8 GUJAR
Slide 19: Movement Non-performing Assets
Movement Non-performing Assets IndoStar Capital Finance (%) IndoStar Housing Finance (%) Gross Stage 3 Net Stage 3 Gross Stage 3 Net Stage 3 15.5 2.6% 9.4 9.1 8.3 1.9% 7.3 1.8% 1.8% 1.7% 4.5 4.1 4.1 3.4 1.4% 2.3 1.2% 1.2% 1.1% 1.1% Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q3 FY22 Q4 FY22 Q1 FY23 Q2 F
Slide 20: Declining Non-performing Assets
Declining Non-performing Assets Consolidated NPA Trends (%) Total Provisioning as % of Loan Assets Gross Stage 3 Net Stage 3 Provision Coverage Ratio Provisioning as % of Loan Assets -5.8 13.6 60.1% 56.8% 57.8% 56.2% 8.2 48.4% 7.9 7.1 6.4 4.3 -2.8 3.6 3.6 2.9 2.3 12.9% 7.1% 8.4% 8.1% 8.3% Q3 FY22 Q4
Slide 21: Stable Net Stage 3 % in 9MFY23
Stable Net Stage 3 % in 9MFY23 Particulars (₹ crs) Q3FY23 Q2FY23 Q1FY23 Q4FY22 Q3FY22 Gross Stage 1 & 2 6,299 6,478 6,674 7,639 8,109 ECL Stage 1 & 2 265 268 271 453 426 Net Stage 1 & 2 6,034 6,210 6,403 7,187 7,683 ECL Provision % 4.2% 4.1% 4.1% 5.9% 5.3% Particulars (₹ crs) Q3FY23 Q2FY23 Q1FY23 Q4
Slide 22: Collection Efficiency over 120% for last 12 months
Collection Efficiency over 120% for last 12 months Overdue / Prepayments Collection efficiency Particulars (₹ crs) EMI Billing EMI collected Total Collection collections % Jan-22 240 176 123 299 125% Feb-22 228 165 115 280 123% Mar-22 247 209 226 435 176% Apr-22 241 195 148 344 142% May-22 240 207 2
Slide 23: Positive ALM on Cumulative Basis
Positive ALM on Cumulative Basis Particulars (₹ in crs) Jan-23 Feb-23 Mar-23 Q1 FY24 Q2 FY24 Q3 FY24 Opening cash & equivalents* 1,331 1,284 1,316 1,203 1,072 945 Loan repayment inflows [Principal] 83 126 96 311 304 309 Fresh borrowings 0 0 0 0 0 0 Total inflow 1,414 1,410 1,412 1,514 1,376 1,254 Li
Slide 24: Diversified Borrowing Profile Supported by Capital Adequacy
Diversified Borrowing Profile Supported by Capital Adequacy Diversified Funding Mix (December 2022) Net-worth and Capital Adequacy Capital 35% 26% 29% 34% 33% Adequacy 8% 0.1% 3,678 38% 2,995 3,050 3,086 2,929 36% Net-worth (₹ crs) 18% Banks Securitisation Equity NCD Others Q3 FY22 Q4 FY22 Q1 FY23 Q
Slide 25: Credit Rating remains Strong
Credit Rating remains Strong Key Rating Drivers Strong Credit Ratings ✓ Demonstrated support from majority shareholders, Borrowing Type Rating Firm Ratings Brookfield & Everstone CRISIL AA (–) Term Loans ✓ Strong capitalisation with healthy net worth base CARE A+ ✓ Increased granularity of loan book
Slide 26: CV Finance
CV Finance
Slide 27: Commercial Vehicle Finance
Commercial Vehicle Finance ✓ AUM of ₹ 3,469 crs ✓ Average Ticket Size of ₹ 5.7 Lakhs ✓ Used Vehicle Disbursement of ~100% in Q3FY23 vs 86% in Q3FY22 ✓ Presence across 20 States ✓ Average Loan to Value Ratio came down to 69.7% in Q3FY23 from 77.6% in Q3FY22 ✓ Disbursements Yield ~19% Gross Stage 3 of
Slide 28: CV Finance: Key Operational Parameters
CV Finance : Key Operational Parameters Average Ticket Size (₹ lakhs) Loan to Value (%) 77.6% 76.8% 7.8 8.0 69.6% 69.7% 68.5% 5.6 5.7 5.5 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Disbursements Yield (%) Geographical Distribution (Value –Wise) (%) 19.9% 19.8% 21% 19.5% No
Slide 29: IndoStar Home Finance Private Limited
IndoStar Home Finance Private Limited
Slide 30: Affordable Home Financing Solutions
Affordable Home Financing Solutions IndoStar Home Finance Private Limited ✓ AUM of ₹ 1,526 crs ✓ Portfolio Average Ticket Size of ₹ 9 Lakhs ✓ Salaried: 51% and Self Employed 49% HF: 84% and LAP: 16% ✓ Presence across 10 States ✓ Average Loan to Value Ratio: 50.94% ✓ Blended Yield ~15.9% Gross Stage
Slide 31: Focusing on Growing Housing Finance Book
Focusing on Growing Housing Finance Book Housing Finance – AUM Housing Finance – Disbursements (₹ crs) (₹ crs) 236 1,526 1,489 1,467 1,406 162 1,221 115 107 82 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 30
Slide 32: Housing Finance: Key Operational Parameters
Housing Finance : Key Operational Parameters Average Ticket Size (₹ lakhs) Live Accounts 18,409 8.7 17,556 17,089 7.8 7.7 16,199 7.5 7.5 14,410 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Loan to Value (%) Geographical Distribution (Value –Wise) (%) 53% 2% ANDHRA PRADESH 53
Slide 33: Housing Finance: Key Financial Parameters
Housing Finance : Key Financial Parameters AUM (₹ crs) Gross Stage 3 & Net Stage 3 (%) +22% 1,526 1.9% 1.8% 1,406 1.7% 1.4% Gross Stage 3 CRAR 996 1.2% 1.1% Net Stage 3 832 0.8% 86.5% 9MFY23 0.7% FY 20 FY 21 FY 22 9M FY23 FY 20 FY 21 FY 22 9M FY23 PPOP & PAT (₹ crs) ROA & ROE (%) 13.8% PPOP PAT 52 5
Slide 34: Catering to Underpenetrated Segments Across Product Types
Catering to Underpenetrated Segments Across Product Types Characteristics Salaried Self Employed Textile loom workers Retail workers Small traders Kirana shop owners FMCG workers School teachers Tea & snack vendors Vegetable vendors Profession Small time Micro scale milk Manual labourers Helpers man
Slide 35: Process Excellence: Credit & Underwriting
Process Excellence: Credit & Underwriting Evaluation of Profile and Property Risk • Collecting KYCs -Aadhar, PAN, Credit history checks with bureaus. Assessment of LTV, FOIR • Assessment of employment / business stability Excluded from Portfolio • Banking Flows, establishing surrogates • RCU/FI ch
Slide 36: Process Excellence: Collections & Monitoring
Process Excellence: Collections & Monitoring Collection Process Pre Bounce / Delinquency Post Bounce / Delinquency • Use of Bounce prediction tool which provides with the pool of • Cases are allocated to branch sales RM/collections officers customers with high probability where focused efforts are p
Slide 37: Analytics driven Risk Management to control Delinquency
Analytics driven Risk Management to control Delinquency Key Risk Management Aspects Monitored ✓ Robust dashboards developed in the system to enable real time monitoring of mentioned parameters Roll Rate Analysis Lagged Bounce Rate Analysis ✓ Dashboards are sent to branch managers to enable them to m
Slide 38: Financial Performance
Financial _ Performance
Slide 39: Vehicle Finance – Income Statement
Vehicle Finance – Income Statement Particulars (₹ in crs) Q3FY23 Q2FY23 Q1FY23 Q4FY22 Q3FY22 Revenue from operations 142.7 142.0 146.7 149.7 141.9 Interest expenses 53.2 56.7 61.6 65.2 47.1 Net Interest Income 89.4 85.3 85.1 84.5 94.8 Other Income 0.0 0.0 0.1 (0.1) 0.5 Total Income 89.4 85.3 85.3 84
Slide 40: Home Finance – Income Statement
Home Finance – Income Statement Particulars (₹ in crs) Q3FY23 Q2FY23 Q1FY23 Q4FY22 Q3FY22 Revenue from operations 45.5 56.8 55.4 53.7 32.5 Interest expenses 16.0 15.7 15.6 5.4 14.8 Net Interest Income 29.4 41.2 39.8 48.3 17.6 Other Income 0.2 0.3 0.2 0.0 0.2 Total Income 29.6 41.5 40.0 48.3 17.8 Emp
Slide 41: SME Finance – Income Statement
SME Finance – Income Statement Particulars (₹ in crs) Q3FY23 Q2FY23 Q1FY23 Q4FY22 Q3FY22 Revenue from operations 38.0 38.7 58.9 44.2 43.9 Interest expenses 21.5 24.4 24.4 25.4 21.5 Net Interest Income 16.4 14.3 34.5 18.8 22.3 Other Income 0.0 0.0 0.0 0.0 0.0 Total Income 16.4 14.3 34.5 18.8 22.3 Emp
Slide 42: Corporate Lending – Income Statement
Corporate Lending – Income Statement Particulars (₹ in crs) Q3FY23 Q2FY23 Q1FY23 Q4FY22 Q3FY22 Revenue from operations 41.6 46.1 43.9 87.4 49.0 Interest expenses 21.3 23.2 23.4 26.2 23.2 Net Interest Income 20.3 22.9 20.5 61.3 25.8 Other Income 0.0 0.0 0.0 0.0 0.0 Total Income 20.3 22.9 20.5 61.3 25
Slide 43: Consolidated Income Statement
Consolidated Income Statement Particulars (₹ in crs) Q3FY23 Q3FY22 Y-o-Y Q2FY23 Q-o-Q 9MFY23 9MFY22 Y-o-Y Revenue from operations 281.3 277.5 294.1 889.2 822.1 Interest expenses 135.4 125.0 146.4 429.8 400.7 Net Interest Income 145.9 152.5 (4%) 147.7 (1%) 459.3 421.4 9% Other Income 0.4 10.6 0.4 1.3
Slide 44: Consolidated Balance Sheet
Consolidated Balance Sheet Equity & Liabilities (₹ in crs) Dec’22 Mar’22 Dec’21 Assets (₹ in crs) Dec’22 Mar’22 Dec’21 Financial Liabilities Financial Asset Trade payables 0.7 2.7 1.1 Cash and cash equivalents 223.7 80.3 76.6 Debt Securities 681.2 1,977.9 1,983.7 Bank balance other than cash & cash
Slide 45: Historical - Consolidated Income Statement
Historical - Consolidated Income Statement Particulars (₹ in crs) FY22 FY21 FY20 Revenue from operations 1,162.7 1,279.8 1,597.5 Interest expenses 539.5 708.6 863.4 Net Interest Income 623.2 571.2 734.1 Other Income 11.6 7.4 1.5 Total Income 634.8 578.6 735.5 Employee Benefits Expense 205.0 173.7 18
Slide 46: Historical - Consolidated Balance Sheet
Historical - Consolidated Balance Sheet Assets (₹ in crs) Mar’22 Mar’21 Mar’20 Financial Asset Cash and cash equivalents 80.3 279.2 168.4 Bank balance other than cash & cash equivalent 409.4 241.0 376.7 Loans 7,706.9 7,139.3 8,293.1 Investments 547.7 1,591.4 230.6 Other financial assets 101.0 143.8
Slide 47: Historical Consolidated Balance Sheet
Historical Consolidated Balance Sheet Equity & Liabilities (₹ in crs) Mar’22 Mar’21 Mar’20 Financial Liabilities Trade payables 2.7 3.9 11.1 Debt Securities 1,977.9 2,012.8 2,089.5 Borrowings other than debt securities 4,245.5 3,994.8 5,052.5 Other financial liabilities 491.4 357.2 256.5 Total finan
Slide 48: Ownership Structure and Management Team
Ownership Structure and Management Team
Slide 49: Large Global Private Equity Parentage
Large Global Private Equity Parentage Shareholding Pattern (As on December 2022) 8.07% 1.18% Shareholders % 1.54% Promoters 89.21 Bcp V Multiple Holdings Pte Ltd (Brookfield) 56.20 Everstone Group 33.01 89.21% Domestic Institutional Investors 1.54 ICICI Prudential Life Insurance Company Limited 1.36
Slide 50: Experienced Management Team
Experienced Management Team Karthikeyan Srinivasan Vinodkumar Panicker Shreejit Menon Chief Executive Officer Chief Financial Officer CEO IndoStar Home Finance Private Limited o He has over 25 years of experience in the areas of Retail Sales, o He has a career span of over 35 years serving in Bankin
Slide 51: Experienced Management Team
Experienced Management Team Arvind Uppal Mihir Bhavsar Priya Prasad Collection Head Chief Information Security Officer, Head-Information Technology Head – Human Resources o He has an overall experience of 20 years in collections with o He has 30 years of experience in the areas of IT, Corporate o Sh
Slide 52: Experienced Management Team - HFC
Experienced Management Team - HFC Strong Independent Management Team With Significant Experience in the Affordable HFC space… SHREEJIT MENON, CEO • He joined IHF in May 2017 • 22+ years in Banking & FS, majority of which has Experience been in leading Housing Finance businesses • Master in Managemen
Slide 53: Esteemed Board of Directors
Esteemed Board of Directors BOBBY PARIKH Naina Krishna Murthy Chairman and Non-Executive Independent Director Non-Executive Independent Director o She has more than two decades of experience in the legal o He has nearly three decades of experience in financial services sector. She is the Founder and
Slide 54: Esteemed Board of Directors
Esteemed Board of Directors Munish Dayal Aditya Joshi Non-Executive Director Non-Executive Director o He is Managing Director - Private Equity & Business Operations o He is MD in Brookfield's Private Equity Group and heads the PE at Brookfield Asset Management (BAM) and has over three for Brookfield
Slide 55: Thank You
COMPANY IndoStar Capital Finance Limited CIN: L65100MH2009PLC268160 Email: investor.relations@indostarcapital.com Website: www.indostarcapital.com Thank You INVESTOR RELATIONS ADVISORS Orient Capital (a division of Link Group) Mr. Nikunj Jain Mr. Amar Yardi +91 9769060608 +91 7045121239 nikunj.jain@
IndoStar Capital Finance — Q3 FY2023 Earnings Presentation on 6ix