Piramal Finance Limited · NSE:PIRAMALFIN
Piramal Finance — Piramal Capital & Housing Finance — Debt Investor Presentation (July 2024)
45 slides from Piramal Finance's debt investor presentation, July 2024
Slide 1: Roadshow Presentation
Roadshow Presentation Piramal Capital & Housing Finance Limited July 2024 | Confidential 0
Slide 2: Disclaimer
Disclaimer Except for the historical information contained herein, statements in this presentation and any subsequent discussions, which include words or phrases such as 'will', 'aim', 'will likely result', 'would', 'believe', 'may', 'expect', 'will continue', 'anticipate', 'estimate', 'intend', 'pl
Slide 3: Table of Contents
Table of Contents 1 Corporate Overview 2 Business Overview A Growth Business: Retail B Growth Business: Wholesale 2.0 C Legacy Business 3 Key Investment Highlights 4 Solid Balance Sheet: Primed for Growth 5 Financial Summary 6 Appendix 2
Slide 4: Corporate Overview
Corporate Overview 3
Slide 5: Piramal Group Snapshot
Piramal Group Snapshot Ajay Piramal Group Successfully raised c. USD 2.2bn in equity during NBFC crisis c. 58% (2) Rights Issue Sale of DRG Pharma Fund Raise c. 46% c. 35%(1) USD 440mn USD 837mn USD 424mn (Jan’20) (Feb’20) (Oct’20) Financial Services Pharma Real Estate Preferential Allotment Shriram
Slide 6: Journey to being full-fledged financial services company
Journey to being full-fledged financial services company Strengthening and Consolidation 2024 • Over 2018-20 raised USD 2.2 bn through equity issuance and asset monetization to improve capital Present and Going Forward 2021 - 2023 adequacy • Deleveraged the business and strengthened 2021 liabilities
Slide 7: DHFL Acquisition – A Summary
DHFL Acquisition – A Summary Major Highlights Key Strategic Rationale Led to the creation of one of the largest pan-India Diversification : Transformed Piramal into a well-diversified lender, 1 focused on retail lending housing finance companies, a platform to address the diverse financing needs of
Slide 8: PEL Merger with PCHFL – Consolidation of Financial Services Businesses
PEL Merger with PCHFL – Consolidation of Financial Services Businesses In May 2024, PEL announced that it will get reverse merged into PCHFL, and entity will be renamed to Piramal Finance Ltd. (“PFL”) Transaction Mechanics1 PCHFL – Natural PCHFLwas naturalChoice choicefor as Consolidation surviving
Slide 9: Business Overview: Well-diversified NBFC, led by Retail lending
Business Overview: Well-diversified NBFC, led by Retail lending 8
Slide 10: Financial Services Business – A Snapshot
Financial Services Business – A Snapshot Retail Wholesale AUM 2.0 AUM GROWTH BOOK Multi-product retail platform - Housing, LAP, New real estate (RE) and corporate mid USD 5,774mn (1) Other Secured and Unsecured Loans USD 765mn market loans (CMML) LEGACY OTHER Legacy BOOK ASSETS Investments Life Insu
Slide 11: Successfully transitioned to a diversified multi-product NBFC led by Retail lending
Successfully transitioned to a diversified multi-product NBFC led by Retail lending Growth business now dominates the AUM mix Growth AUM up Growth 55% YoYBook AUM (up 55% YoY) In USD mn Growth AUM Legacy AUM Total AUM (USD mn) 6,539 765 8,295 4,209 7,854 7,710 336 5,774 Total 21% 3,873 Wholesale 2.0
Slide 12: Growth Business on path of steady profitability
Growth Business on path of steady profitability Yield and NIM Fee income Opex % Avg. AUM Yield Cost of Funds NIM % Avg. AUM % Avg. AUM 1.3% 5.6% 13.9% 13.7% 1.1% 5.2% 7.7% 7.1% 6.2% 6.5% FY23 FY24 FY23 FY24 FY23 FY24 PPOP Credit cost PBT % Avg. AUM % Avg. AUM In USD mn % Avg. AUM FY23 FY24 1.9% 2.8%
Slide 13: Experienced, strong and stable management to drive each business vertical
Experienced, strong and stable management to drive each business vertical Jairam Sridharan Rupen Jhaveri CEO, Retail Group President Former CFO at Axis bank Former MD at KKR India IIT Delhi, IIM Calcutta NYU Stern School of Business Yesh Nadkarni Kalpesh Kikani CEO, Wholesale CEO, Piramal Alternativ
Slide 14: Strong panel of Independent Directors
Strong panel of Independent Directors having deep expertise in Financial Services and Technology sector Guided by Expert Counsel Shikha Sharma Anjali Bansal Kunal Bahl Rajiv Mehrishi Anita George Non-Executive Director Independent Director Independent Director Independent Director Independent Direct
Slide 15: Growth Business Vision & Outline: Retail Business
Growth Business Vision & Outline Retail Business 14
Slide 16: Retail Business Outline & Strategy
Retail Business Outline & Strategy Diversified retail business with housing as the foundation Target segment is the budget customer of Bharat Core differentiation: Execution rigour on a “High tech + High touch” strategy Business gaining traction in all chosen segments Maintain strong control on asse
Slide 17: Experienced and strong leadership team drives retail business
Experienced and strong leadership team drives retail business 20+ years Jairam Sridharan CEO, Retail Jagdeep Mallareddy Sunit Madan Saurabh Mittal Markandey Upadhyay Vipul Agarwal Arvind Iyer Chief Business Officer Chief Operating Officer Chief Technology Officer Chief Data & Analytics Business Head
Slide 18: Retail Business Positioning
Retail Business Positioning A lender that goes beyond PAPERS and sees the INTENT of the person Who are we? High Touch High Tech Who are our customers? What we do for them? Budget customers of Bharat, residing in Provide credit to the “UNDERSERVED” Tier 2 and Tier 3 geographies of India to achieve th
Slide 19: Execution strategy driven by strong branch expansion and productivity
Execution strategy driven by strong branch expansion and productivity Branch mix by vintage Benchmark monthly disbursement per branch (USD mn) 490 470 442 422 404 283 282 282 282 282 0.82 41 93 117 6 29 41 59 0.39 71 46 47 75 60 49 0.18 40 43 0.06 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 <6 months 6
Slide 20: Robust infrastructure and processes backed by on-ground team
Robust infrastructure and processes backed by on-ground team Home loan Sales and Underwriting (u/w) Eligibility checks Monitoring Collections as an example Sourcing and sanction D A High Touch G C B C E High Tech F A. Strong branch A B B. Parameterized High Tech and High Touch are E. Real time F F.
Slide 21: Strong execution of multi-product lending growth strategy
Strong execution of multi-product lending growth strategy Retail AUM1 (USD mn) Consistent growth in customers3 5,774 In mn 4% Salaried personal loans 6.5% 5,184 4% Microfinance loans 2.5% 4,651 23% 5% Unsecured business 3.9 4.1 4,243 3.6 23% loans 3.3 3.3 3,873 5% 5% 6.4% 2.6 22% Merchant BNPL 6% 21
Slide 22: Diversified product spectrum catering to the target customer segment
Diversified product spectrum catering to the target customer segment 1Product Segments Average disbursement Disbursement Share in Products AUM yield2 (%) Share in AUM3 (%) ticket size (INR lakh) yield (%) disbursements (%) Affordable housing 1 Housing Mass affluent housing 19.2 11.1% 32.4% 11.5% 45.
Slide 23: Strong growth momentum across products with robust asset quality
Strong growth momentum across products with robust asset quality Housing Loans: 46% of Retail AUM Other Secured Loans: 5% of Retail AUM In USD mn AUM Disbursements In USD mn AUM Disbursements 348 115 291 279 279 230 73 47 40 34 94 123 156 206 288 1,996 2,106 2,283 2,443 2,653 Q4 FY23 Q1 FY24 Q2 FY24
Slide 24: Growth Business Vision & Outline: Wholesale 2.0
Growth Business Vision & Outline Wholesale 2.0 23
Slide 25: Wholesale 2.0 – Tapping Opportunity in Underpenetrated Real Estate and Corporate Mid-Market Lending
Wholesale 2.0 – Tapping Opportunity in Underpenetrated Real Estate and Corporate Mid-Market Lending Why Real Estate Financing Market? OPPORTUNE TIMING DEVELOPER GAP IN HFC / NBFC SPACE TIER 2/3 MARKETS Beginning of growth cycle as CONSOLIDATION Sector getting vacated resulting in Underpenetrated and
Slide 26: Wholesale 2.0 | Learning and differentiating from Wholesale 1.0
Wholesale 2.0 | Learning and differentiating from Wholesale 1.0 Wholesale 1.0 Wholesale 2.0 Building a granular book with clear single name and project exposure Large and Chunky Exposures limits Clear diversification targets between Real estate and Corporate Mid- High residential real estate exposur
Slide 27: Wholesale 2.0 | Experienced and strong leadership team to drive growth
Wholesale 2.0 | Experienced and strong leadership team to drive growth 20+ years Yesh Nadkarni CEO, Wholesale Lending Sriram S Sathya M Sandeep A Rohit G Value Enhancement Group (VEG) 20+ years 25+ years 20+ years 20+ years Credit Management team Asset Mgmt Vikash A Arpit B Khodadad P 15+ years 15+
Slide 28: Wholesale 2.0 | Building Sustainably with Diversity and Caution
Wholesale 2.0 | Building Sustainably with Diversity and Caution WS 2.0 AUM: A Granular Build-out Well Balanced Asset Duration In USD mn In USD mn 1,000 15.2 14.9 18.0 14.4 16.0 32% 12.7 29% 800 14.0 29% 12.0 600 10.0 8.0 400 765 670 6.0 10% 542 248 200 4.0 223 220 367 2.0 0 0.0 74 Q1 FY24 Q2 FY24 Q3
Slide 29: Legacy Business: Demonstrated Accelerated Rundown
Legacy Business: Demonstrated Accelerated Rundown 28
Slide 30: Legacy Business rundown accelerated in last two years
Legacy Business rundown accelerated in last two years Legacy AUM Successful run down of WS 1.0 portfolio Q4 FY24 66% Sale of assets USD 855 mn Organic Reduction Reduction through sale of large holding company load to another From project cashflows / promoter counterparty infusion and refinance in FY
Slide 31: Continuing with strategy, Legacy Book expected to be <5% of overall book by FY26
Continuing with strategy, Legacy Book expected to be <5% of overall book by FY26 Taking legacy AUM to <10% of total AUM in FY25; and <5% in FY26 Potential P&L items to consider for the legacy business In USD mn Adequately provided for 1 USD 303mn existing provisions made against existing legacy book
Slide 32: Strong Balance Sheet: Primed For Growth
Strong Balance Sheet: Primed For Growth 31
Slide 33: Well capitalized balance sheet supported by robust asset quality
Well capitalized balance sheet supported by robust asset quality Healthy asset quality with metrics now in line with pre-stress periods 4.3% 4.1% 4.0% 3.7% 3.7% 3.7% 3.8% 3.3% 3.4% 2.5% 2.9% 2.8% 2.7% 2.5% 2.4% 2.4% 2.1% 2.2% 1.8% 1.8% 1.8% 1.9% 1.6% 1.6% 1.6% 1.7% 1.5% 1.5% 1.5% 1.3% 1.1% 0.8% Q1 F
Slide 34: Ability to access financing through a wide range of lenders across instruments
Ability to access financing through a wide range of lenders across instruments Breakdown of Borrowing Mix by type of instruments ~30 banking relationships across PSU and private banks 1% Public Sector Banks 4% 1% 1% 1% 2% 3% 4% 6% 9% 7% 2% 10% 1% 2% 2% 10% 9% 7% 27% 26% (1) 29% 32% 31% 60% 58% 55% 5
Slide 35: Well matched ALM profile and high surplus cash reserves
Well matched ALM profile and high surplus cash reserves Tenor with asset-liability position (1) Cumulative GAP(2) (%) +763% +301% +52% +21% +19% +15% +37% +34% +9% In USD mn 13,548 12,432 Cumulative inflows 9,689 Cumulative outflows 7,678 7,246 5,619 3,496 3,038 1,931 1,616 958 1,221 1,009 561 712 6
Slide 36: Key Investment Highlights
Key Investment Highlights 35
Slide 37: Key Investment Highlights
Key Investment Highlights A growing diversified lending business being built by an excellent management team and backed by solid promoter group Strong promoter group with demonstrated ability to raise equity and debt across market 1 cycles Management team with track record brought on board to scale
Slide 38: Appendix
Appendix 37
Slide 39: Financial Summary
Financial Summary 38
Slide 40: Summary Financials
Summary Financials Summarised P&L Statement Summarised Balance Sheet Consolidated income statement (in USD Mn) FY23 FY24 Consolidated balance sheet (in USD Mn) FY23 FY24 (1) Interest income 940 894 Assets Less: Interest expense 487 530 Cash & liquid investments 895 794 Net interest income (A) 453 36
Slide 41: Merger | Key Indicative Events and Tentative Timelines
Merger | Key Indicative Events and Tentative Timelines1 Q1FY25 Q2FY25 Q3FY25 Q4FY25 Q1FY26 Board Approval (May 8th, 2024) Blackout Period2 Filing of scheme with Stock Exchanges & NOC from ~40-45 Days RBI Receipt of Stock Exchanges & RBI approval NCLT processes NCLT Approval (includes necessary appro
Slide 42: Sustainable Finance Framework
Sustainable Finance Framework 41
Slide 43: Sustainable Finance Framework (1/2)
Sustainable Finance Framework (1/2) About the Framework: The Companies’ Sustainable Finance Framework is structured based on the following core components: • Use of proceeds • Process for Project Evaluation and Selection • Management of Proceeds • Reporting • External Review Use of Proceeds: The fun
Slide 44: Sustainable Finance Framework (2/2)
Sustainable Finance Framework (2/2) Project Evaluation and Selection Management of Proceeds Monitoring and Reporting External Review ▪ The Companies will manage a pool of ▪ The utilization of proceeds generated ▪ Within 1 year from the issuance of said ▪ Pre-Issuance Review (Second Party eligible pr
Slide 45: Thank You
Thank You 44
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