Indostar Capital Finance Limited · NSE:INDOSTAR
Indostar Capital Finance — Q4 FY2023 Earnings Presentation
59 slides from Indostar Capital Finance's earnings presentation, May 27, 2023
Slide 1: Revision in Investor Presentation cover letter to exchanges
ICFL/LS/0045/2023-24 27 May 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.: Revision
Slide 2: IndoStar Capital Finance Investor Presentation May 2023
“Your Path To A Better Life” INDOSTAR CAPITAL FINANCE Investor Presentation May 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 – FY23
Key Performance Highlights – FY23 AUM Disbursements Gross Stage 3 Net Stage 3 CRAR Branches ₹ 7,813 crs ₹ 2,099 crs 6.8% 3.2% 31.5% CRAR 427 Branches FY22: ₹ 9,658 crs FY22: ₹ 4,947 crs FY22: 13.6% FY22: 6.4% FY22: 25.8% FY22: 404 Net Total Income PAT NIMs ₹ 599.4 crs ₹ 225.2 crs 6.1% FY22: ₹ 634.8
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 Finance We provide financing for New/ Used CV, Construction engages in providing affordable home financing Equipment, Tractor & Used Car solutions to self-employed and salaried customers. 5
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 11.5% Core focus of
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 Units Sold Projections New Commercial Vehicles (CV) sales fell 45% over two years from 10.3L in FY’19 to 5.7L in FY’21, driven by a slowdown in +20.7% 12.5 econom
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 10.2 35% > 15 Lacs HIG
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 2023 Business Business • Leverage our existing reach by increasing penetration to field/site to • T
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 8,998 9,658 8,247 7,908 7,669 7,813 15% FY23 5,000 3,469 4,643 4,194 3,835 3,612 3,672 42% 4,908 46% 47% 47% 46% 45% 51% 47% 85% 5% 551 8% 832 26% 1,899 11% 996
Slide 17: Retailisation Strategy Playing Out
Retailisation Strategy Playing Out Disbursements: CL vs Retail (₹ crs) Disbursements: Retail (₹ crs) 6,448 3,505 1,827 4,947 344 334 522 898 4,885 564 579 3,054 2,356 3,054 1,609 442 330 840 926 2,356 4,885 324 +155% 347 1,937 534 3,743 14 840 363 1,609 0 487 183 374 3,394 288 442 1,149 1,646 330 32
Slide 18: National Footprint Creating Runway for Growth
National Footprint Creating Runway for Growth No States 427 Branches Across 22 States 1 HIMACHAL PRADESH – 2 413 424 423 427 404 2 PUNJAB – 9 56 35 42 62 77 3 UTTARAKHAND – 9 343 24 65 67 75 73 1 66 4 HARYANA – 11 63 2 5 NEW DELHI – 2 3 4 6 UTTAR PRADESH- 31 5 304 304 293 288 284 7 RAJASTHAN – 29 25
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% 9.4% 9.1% 8.3% 8.1% 1.9% 1.8% 7.3% 1.7% 1.4% 1.1% 1.2% 1.2% 1.3% 1.1% 4.1% 4.1% 3.8% 0.9% 3.4% Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4FY23 Q4 FY22 Q1 FY23 Q2
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 Stage 3 Provision Coverage Ratio Provisioning as % of Loan Assets -6.8 13.6% 60.1% 56.8% 57.8% 56.2% 54.2% 8.2% 7.9% 7.1% 6.8% 6.4% -3.2 3.6% 3.6% 2.9% 3.2% 12.9% 8.4% 8.1% 8.
Slide 21: Stable Net Stage 3 % in FY23
Stable Net Stage 3 % in FY23 Particulars (₹ crs) Q4FY23 Q3FY23 Q2FY23 Q1FY23 Q4FY22 Gross Stage 1 & 2 6,591 6,308 6,478 6,674 7,639 ECL Stage 1 & 2 294 265 268 271 453 Net Stage 1 & 2 6,297 6,043 6,210 6,403 7,187 ECL Provision % 4.5% 4.2% 4.1% 4.1% 5.9% Particulars (₹ crs) Q4FY23 Q3FY23 Q2FY23 Q1FY
Slide 22: Collection Efficiency over 145% for last 12 months
Collection Efficiency over 145% for last 12 months Overdue / Prepayments Collection efficiency Particulars (₹ crs) EMI Billing EMI collected Total Collection collections % Apr-22 241 195 148 344 142% May-22 240 207 205 411 171% Jun-22 243 203 355 558 229% Jul-22 226 191 118 309 137% Aug-22 205 178 8
Slide 23: Positive ALM on Cumulative Basis
Positive ALM on Cumulative Basis Particulars (₹ in crs) Apr-23 May-23 Jun-23 Q2 FY24 Q3 FY24 Q4 FY24 Opening cash & equivalents* 1,467 1,529 1,394 1,278 1,198 1,369 Loan repayment inflows [Principal] 110 113 131 351 357 353 Fresh borrowings 0 0 0 0 0 0 Total inflow 1,577 1,642 1,525 1,629 1,555 1,72
Slide 24: Diversified Borrowing Profile Supported by Capital Adequacy
Diversified Borrowing Profile Supported by Capital Adequacy Diversified Funding Mix (March 2023) Net-worth and Capital Adequacy Capital 26% 29% 34% 33% 32% Adequacy 13% 36% 2,995 3,050 3,086 3,112 2,929 36% 0% Net-worth (₹ crs) 16% NCD Banks Securitisation Others Equity Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY
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 ₹ 3,672 crs Average Ticket Size of ₹ 6.8 Lakhs Used Vehicle Disbursement of 96% in Q4FY23 vs 74% in Q4FY22 Presence across 20 States Average Loan to Value Ratio came down to 72.7% in Q4FY23 from 76.8% in Q4FY22 Disbursements Yield ~19% Gross Stage 3 of 7
Slide 28: CV Finance : Key Operational Parameters
CV Finance : Key Operational Parameters AUM (₹ crs) AUM Mix (Geography –Wise) (%) 4,908 North 20% 3,835 3,672 29% South 3,612 3,469 East West 19% 32% Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Average Ticket Size (₹ lakhs) Loan to Value (%) 76.8% 8.0 72.7% 6.8 69.6% 69.7% 68.5% 5.6 5.7 5.5 Q4FY22 Q1FY23 Q2F
Slide 29: CV Finance : Key Operational Parameters
CV Finance : Key Operational Parameters Disbursements (₹ crs) Disbursements Yield (%) 19.9% 19.8% 19.5% 1,306 19.1% 657 16.4% 334 203 240 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Disbursement Mix (Product –Wise) (%) Disbursement Mix (Geography –Wise) (%) Car North 16% Co
Slide 30: IT – Key Enabler for Control / Growth
IT – Key Enabler for Control / Growth IndoStar Connect – IndoStar Connect - Lending Software Payment Automation Onboarding Verification & Validation End to End services • Digital loan origination mobile and web • One click verification of proof of • Digital case credit assessment memo • A digitized
Slide 31: IndoStar Home Finance Private Limited
IndoStar Home Finance Private Limited
Slide 32: Affordable Home Financing Solutions
Affordable Home Financing Solutions IndoStar Home Finance Private Limited AUM of ₹ 1,623 crs Portfolio Average Ticket Size of ₹ 8.9 Lakhs Salaried: 52% and Self Employed 48% HF: 82% and LAP: 18% Presence across 10 States Average Loan to Value Ratio: 48.74% Blended Yield ~14.8% Gross Stag
Slide 33: Focusing on Growing Housing Finance Book
Focusing on Growing Housing Finance Book Housing Finance – AUM Housing Finance – Disbursements (₹ crs) (₹ crs) 1,623 236 1,526 1,489 183 1,467 1,406 115 107 82 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 32
Slide 34: Housing Finance : Key Operational Parameters
Housing Finance : Key Operational Parameters Average Ticket Size (₹ lakhs) Live Accounts 20,162 8.9 18,409 8.7 17,556 17,089 7.8 7.7 16,199 7.5 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Loan to Value (%) Geographical Distribution (Value –Wise) (%) 0% ANDHRA PRADESH 53% 11
Slide 35: Housing Finance : Key Financial Parameters
Housing Finance : Key Financial Parameters AUM (₹ crs) Gross Stage 3 & Net Stage 3 (%) +25% 1,623 1.9% 1,406 1.8% 1.4% CRAR 996 1.3% 1.1% Gross Stage 3 832 0.8% 0.9% 80.5% Net Stage 3 FY23 0.7% FY 20 FY 21 FY 22 FY23 FY 20 FY 21 FY 22 FY23 PPOP & PAT (₹ crs) ROA & ROE (%) 13.8% PPOP PAT 52 51 48 7.8
Slide 36: 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 37: 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 38: 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 39: 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 Lagged Dashboards are sent to branch managers to enable them to monitor their originated Roll Rate Analys
Slide 40: Financial Performance
Financial Performance
Slide 41: ICF Standalone - Income Statement
ICF Standalone - Income Statement Particulars (₹ in crs) Q4FY23 Q3FY23 Q-o-Q Q4FY22 Y-o-Y FY23 FY22 Y-o-Y Revenue from operations 236.0 237.2 291.6 968.9 1,042.2 Interest expenses 134.3 120.7 129.0 518.0 514.3 Net Interest Income 101.7 116.5 (13)% 162.6 (37)% 450.9 527.9 (15)% Other Income 3.9 0.2 0
Slide 42: ICF Standalone - Balance Sheet
ICF Standalone - Balance Sheet Equity & Liabilities (₹ in crs) Mar’23 Dec’22 Mar’22 Assets (₹ in crs) Mar’23 Dec’22 Mar’22 Financial Liabilities Financial Asset Trade payables 7.4 0.7 2.7 Cash and cash equivalents 165.0 216.0 71.8 Debt Securities 1,108.9 681.2 1,977.9 Bank balance other than cash &
Slide 43: HFC - Income Statement
HFC - Income Statement Particulars (₹ in crs) Q4FY23 Q3FY23 Q-o-Q Q4FY22 Y-o-Y FY23 FY22 Y-o-Y Revenue from operations 50.6 45.5 52.8 208.3 144.6 Interest expenses 17.7 16.1 13.7 65.2 49.3 Net Interest Income 32.9 29.4 12% 39.2 (16)% 143.1 95.3 50% Other Income 0.3 0.2 0.0 0.9 0.2 Total Income 33.2
Slide 44: HFC - Balance Sheet
HFC - Balance Sheet Equity & Liabilities (₹ in crs) Mar’23 Dec’22 Mar’22 Assets (₹ in crs) Mar’23 Dec’22 Mar’22 Financial Liabilities Financial Asset Trade payables 23.9 0.0 12.0 Cash and cash equivalents 10.1 3.1 3.9 Borrowings other than debt securities 835.0 796.4 740.5 Bank balance other than ca
Slide 45: Consolidated - Income Statement
Consolidated - Income Statement Particulars (₹ in crs) Q4FY23 Q3FY23 Q-o-Q Q4FY22 Y-o-Y FY23 FY22 Y-o-Y Revenue from operations 285.2 281.3 340.6 1,174.3 1,162.7 Interest expenses 150.4 135.4 138.9 580.3 539.5 Net Interest Income 134.8 145.9 (7.6)% 201.8 (33.2)% 594.1 623.2 (4.7)% Other Income 4.1 0
Slide 46: Consolidated - Balance Sheet
Consolidated - Balance Sheet Equity & Liabilities (₹ in crs) Mar’23 Dec’22 Mar’22 Assets (₹ in crs) Mar’23 Dec’22 Mar’22 Financial Liabilities Financial Asset Trade payables 7.9 0.7 2.7 Cash and cash equivalents 179.7 223.7 80.3 Debt Securities 1,108.9 681.2 1,977.9 Bank balance other than cash & ca
Slide 47: Historical - Consolidated Income Statement
Historical - Consolidated Income Statement Particulars (₹ in crs) FY23 FY22 FY21 FY20 Revenue from operations 1,174.3 1,162.7 1,279.8 1,597.5 Interest expenses 580.3 539.5 708.6 863.4 Net Interest Income 594.1 623.2 571.2 734.1 Other Income 5.3 11.6 7.4 1.5 Total Income 599.4 634.8 578.6 735.5 Emplo
Slide 48: Historical - Consolidated Balance Sheet
Historical - Consolidated Balance Sheet Assets (₹ in crs) Mar’23 Mar’22 Mar’21 Mar’20 Financial Asset Cash and cash equivalents 179.7 80.3 279.2 168.4 Bank balance other than cash & cash equivalent 236.0 409.4 241.0 376.7 Loans 6,515.7 7,706.9 7,139.3 8,293.1 Investments 1,039.4 547.7 1,591.4 230.6
Slide 49: Historical - Consolidated Balance Sheet
Historical - Consolidated Balance Sheet Equity & Liabilities (₹ in crs) Mar’23 Mar’22 Mar’21 Mar’20 Financial Liabilities Trade payables 7.9 2.7 3.9 11.1 Debt Securities 1,108.9 1,977.9 2,012.8 2,089.5 Borrowings other than debt securities 4,539.2 4,245.5 3,994.8 5,052.5 Other financial liabilities
Slide 50: Ownership Structure and Management Team
Ownership Structure and Management Team
Slide 51: Large Global Private Equity Parentage
Large Global Private Equity Parentage Shareholding Pattern (As on March 2023) 8.09% 1.16% Shareholders % 1.54% Promoters 89.21 Bcp V Multiple Holdings Pte Ltd 56.20 (Brookfield) Everstone Group 33.01 89.21% Domestic Institutional Investors 1.54 ICICI Prudential Life Insurance 1.36 Company Limited Fo
Slide 52: Experienced Management Team - ICF
Experienced Management Team - ICF 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
Slide 53: Experienced Management Team - ICF
Experienced Management Team - ICF Arvind Uppal Mihir Bhavsar Priya Prasad Collection Head Chief Information Security Officer 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 She has over 17 years of
Slide 54: Experienced Management Team - ICF
Experienced Management Team - ICF Kaushal Vinay Mithani Devaraj C Head - Treasury Chief Business Officer o He is a qualified Chartered Accountant having more than 23 o Devaraj C, is MBA from Bharathiar University, With a career years of experience in the domain of Treasury related to span of 22 year
Slide 55: Experienced Management Team - HFC
Experienced Management Team - HFC Shreejit Menon Jayesh Kothawade Pushkar Joshi Chief Executive Officer Head-Internal Audit Chief Financial Officer o Shreejit Menon is the Deputy CEO of IndoStar Home Finance o He has Credit & Banking professional having experience of 18 o He has over 13 plus years o
Slide 56: Experienced Management Team - HFC
Experienced Management Team - HFC Krishanu Ray Sathish Mehta Head-Operations & Customer Experience Chief Digital Officer o He has over 15 years of experience in the areas of Operations & o He has over 15 years of experience in Digital Lending, Customer relationship Management Automation, Program/Pro
Slide 57: Esteemed Board of Directors
Esteemed Board of Directors BOBBY PARIKH Naina Krishna Murthy Non-Executive Independent Director Chairman and 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 58: 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 59: 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 — Q4 FY2023 Earnings Presentation on 6ix