Poonawalla Fincorp Limited · NSE:POONAWALLA
Poonawalla Fincorp — Q2 FY24 Earnings Presentation
52 slides from Poonawalla Fincorp's earnings presentation, Oct 20, 2023
Slide 1: Regulation 30 cover letter to stock exchanges
October 20, 2023 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: Investor Presentation Q2FY24
Poonawalla Fincorp Limited Investor Presentation Q2FY24 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 Journey So Far & Way Forward 38 6 Board Members and Awards & Accolades 44 2
Slide 4: Q2FY24 Performance
Q2FY24 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 ₹ 20,215 crore ₹ 7,807 crore +54% YoY | +14% QoQ +151% YoY | +1
Slide 5: Executive Summary
Executive Summary Setting the momentum for expanding growth horizon Strong Business Momentum Continues in Q2FY24 ▪ Highest ever disbursement of ₹ 7,807 crore with growth across all product lines ▪ Consistent increase in disbursement: Up 151% YoY & 11% QoQ ▪ AUM at ₹ 20,215 crore with a growth of 54%
Slide 6: Executive Summary
Executive Summary Setting the momentum for expanding growth horizon Robust Asset Quality ▪ GNPA & NNPA reduced to 1.36% and 0.72% respectively compared to 1.42% & 0.76% in Q1FY24 and as compared to 1.77% & 0.94% in Q2FY23 ▪ Provision Coverage Ratio (PCR %) stood at 47.2% Rise in Profitability – Q2FY
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 Journey So Far & Way Forward 38 6 Board Members and Awards & Accolades 44 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 Credit Risk Cost of Operating Cost Risk Customer
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 Parameters Traditional Bank Traditional NBFC Digital Capability Fintech NBFC Poonawalla Fincorp Loan Amount No Yes Yes No Yes Flexibility Collateral Free No Yes Yes Yes Yes Quick Turnaround No No Yes Yes Yes Time 100% Digital No No No
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? Operating Efficiency AUM Growth Portfolio Quality Digital Reach Customer Satisfaction Consistent Consistent 10% Best-in-class GNPA Increased customer Improvement in NPS reduction in Opex AUM growth QoQ & NNPA acquisition ratio We have built an engine that
Slide 15: Risk Management integrated into the strategy
Risk Management integrated into the strategy • Prime & Super Prime Segment • Bureau Score 700+ • Time maturity model • Demonstrated credit behavior • Better customer understanding Credit Tested • Credit risk optimized Customers • X-Sell & Up-Sell optimized Digital • Bureau Data Start Small Grow Big
Slide 16: Transformation journey so far
Transformation journey so far Dec-20 (Legacy Magma) Sep-23 (Poonawalla Fincorp) Parameters (Standalone) (Pre-Acquisition) (Post-Acquisition) Assets Under Management (AUM) ₹ 11,631 crore ₹ 20,215 crore Cost of Borrowing (%) 9.64% 7.98% GS3/Gross NPA (%)1 8.23% 1.36% NS3/Net NPA (%) 1 5.35% 0.72% 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 46% Short Term (Upto 12 mths) 27% Current Unsecured Portfolio 54% Medium & Long Term (>12 mths) 73% Secured Portfolio 40% Short Term (Upto 12 mths) 20 - 25% Road Ahead Unsecured Portfolio 60% 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 Journey So Far & Way Forward 38 6 Board Members and Awards & Accolades 44 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 (Q2FY24 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 4.9x 7,063 7,807 6,371 3,110 3,369 2,379 1,600 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Minimal paperwork, reduced human intervention &
Slide 25: Diversified Assets Under Management
1b Diversified Assets Under Management Contribution ₹ crore MSME Lending 7,235 35% Personal and Consumer 4,367 22% • Pure retail portfolio with focus on Pre-owned Car 2,962 15% MSME and Consumer segment. • AUM well diversified across Loan Against Property 2,851 14% products, geographies and sourcing
Slide 26: Distribution: In Sync with Emerging Business Models
2a Distribution: In Sync with Emerging Business Models Direct Digital Program (DDP) led distribution model Direct Channel Digital Channel Digital ecosystem In-house sourcing of In-house sourcing of Multiple tie-ups, alliances & DDP Distribution customers through own customers through web, social par
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 led digital onboarding CRM
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 0.78 0.76 0.72 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Chosen market segment,
Slide 31: Optimizing Cost of Borrowing & Liquidity Position
5 Optimizing Cost of Borrowing & Liquidity Position Despite repo rate hike of 250 bps, our average cost of borrowing increased only by 44 bps since Q4FY22 Average Cost of Borrowing (PFL) 9.10% 8.00% 8.04% 7.98% 7.90% 7.54% 7.54% 7.16% 6.97% Repo rate hike → Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23
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 Journey So Far & Way Forward 38 6 Board Members and Awards & Accolades 44 32
Slide 34: Performance Parameters
Performance Parameters Robust growth continues | Significant reduction in GNPA & NNPA ₹ crore Disbursement AUM Net-worth 7,781 20,215 7,807 17,776 7,063 16,143 6,371 6,649 13,929 6,425 12,606 13,161 6,212 3,369 11,765 6,018 2,901 3,110 5,878 2,539 5,715 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY
Slide 35: ALM statement and Liquidity
ALM statement and Liquidity Structural Liquidity Statement as on September 30, 2023 Cumulative inflows (₹ crore) Cumulative outflows (₹ crore) 24,521 24,521 21,712 19,638 16,233 13,813 13,708 10,966 8,722 9,112 7,309 3,948 3,238 3,783 1,793 2,240 1,168 518 744 99 0-7 days 8-14 days 15-30 days 1-2 m
Slide 36: Asset Quality
Asset Quality Significant improvement on sustained basis Particulars Sep-22 Jun-23 Sep-23 Gross NPA (₹ crore) 224 245 266 Net NPA (₹ crore) 118 131 140 Gross NPA (%) 1.77% 1.42% 1.36% Net NPA (%) 0.94% 0.76% 0.72% Provision Coverage Ratio (%) 47.32% 46.43% 47.17% % of on-book AUM ▪ The restructured
Slide 37: Profit & Loss Statement
Profit & Loss Statement Particulars (₹ crore) Q2FY23 Q1FY24 Q2FY24 YoY QoQ Total Income 481 712 745 55% 5% Interest Expenses 144 235 216 50% -8% Operating Expenses 211 183 194 -8% 6% Operating Profit 126 294 336 167% 14% Credit Cost -48 27 28 - - Profit after Tax 130 200 230 77% 15% Profit after Tax
Slide 38: Balance Sheet
Balance Sheet Particulars (₹ crore) 30-Sep-22 30-Sep-23 YoY Cash & Bank Balances 335 185 -45% Receivables 22 32 45% Loans 12,290 17,952 46% Investments 1,479 427 -71% Other Financial Assets 317 541 71% Non-Financial Assets 534 480 -10% Total Assets 14,978 19,618 31% Borrowings 8,510 11,220 32% Other
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 Journey So Far & Way Forward 38 6 Board Members and Awards & Accolades 44 38
Slide 40: Digital Transformation Journey So Far & Way Forward
Digital Transformation Journey So Far & Way Forward We have successfully completed Phase 1 of technology transformation and launched multiple new products as per our stated strategy. It has helped put in place a stable and scalable digital platform. With strong roots in place, the Company has now em
Slide 41: Strong Roots of Digital, Technology & Analytics
Strong Roots of Digital, Technology & Analytics Successfully implemented in Phase 1 Customer Relationship Rule Engine Loan Management Collection Management Loan Origination Platform Management Platform Platform Platform Core Platform Lead generation Onboarding Real time Analysis Loan Servicing Dues
Slide 42: Phase 2: Deepening Technology, Digital & Analytics
Phase 2: Deepening Technology, Digital & Analytics Innovative, Personalized, Engaging & Convenient - For superior customer experience Highly customised orchestration layer integrating across channels to create unique experience Consumer Data Apps Eco-System Personalization Engagement Products Consen
Slide 43: Phase 2: Journey Started..
Phase 2 :Journey Started.. On track to deliver in next quarter (~85% work completed in Q2FY24) Straight Through Customer Mobile Super App Based Lending Digital Collections Customer Portal Disbursal Platform App & Referrals Platform Enhanced Digital Platform Automated & Fully Partner On-boarding & Se
Slide 44: Phase 2: Enhanced Customer Service - 360 View
Phase 2: Enhanced Customer Service - 3600 View* Self Service, Personalized, Insight Driven – “Making Service delivery a Sales Channel” Self Service & FTR Resolutions Promote & Manage Cross Sell • Segmented campaign management in CRM • Agent assist & Customer 360 • Loan details • STP fulfilment journ
Slide 45: Agenda
Agenda 1 Overview & Executive Summary 2 2 Our Business Model 6 3 Strategy Execution 18 4 Business & Financial Highlights 32 5 Digital Transformation Journey So Far & Way Forward 38 6 Board Members and Awards & Accolades 44 44
Slide 46: 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 47: Awards and Accolades
Awards and Accolades Risk Management Customer Centricity Winner of ‘Golden Peacock ‘Risk Management Team Award for Risk Management’ Best Customer of the Year’ at UBS at IOD India’s 2023 Annual Experience providing Forum’s CRO Summit and London Global Convention NBFC at Quantic India Leadership Award
Slide 48: 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 49: Launch of '#DoItTibara' Campaign
Launch of ‘#DoItTibara’ Campaign Cricket Song of the year to celebrate India’s most beloved sport • India is a cricket-loving nation and Poonawalla Fincorp, as a national brand resonates with every single individual who holds an equal amount of love and passion for the game of cricket. • This is not
Slide 50: 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 51: 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 52: Thank You
THANK YOU Team – Investor Relations Investor.relations@poonawallafincorp.com