Indostar Capital Finance Limited · NSE:INDOSTAR
Indostar Capital Finance — Q3 FY2020 Earnings Presentation
40 slides from Indostar Capital Finance's earnings presentation, Feb 6, 2020
Slide 1: Q3 & 9MFY20 Results Update
INDOSTAR CAPITAL FINANCE LIMITED Q3 & 9MFY20 Results Update 6 February 2020
Slide 2: Disclaimer
Disclaimer This presentation and the accompanying slides (the “Presentation”) have been prepared by IndoStar Capital Finance Limited (“IndoStar” or the “Company”) solely for information purposes and do not constitute an offer to sell or, recommendation or solicitation of an offer to subscribe for or
Slide 3: Discussion Summary
Discussion Summary ❖ Brookfield investment in IndoStar Capital ❖ Quarterly Results ❖ Shareholding Structure
Slide 4: Brookfield investment in IndoStar Capital
Brookfield investment in IndoStar Capital ✓ First Private Equity deal by Brookfield in the Indian Financial Services space ✓ Brookfield is a leading global alternative asset manager ✓ AUM USD 510 bn ✓ USD 18 bn already invested in India ✓ Brookfield to invest growth capital of ₹ 12,250 mn through pr
Slide 5: Strong positives of Brookfield investment
Strong positives of Brookfield investment ✓ Endorsement of Company’s Business Model, Management Capability and Retail Franchise ✓ Further strengthens Capital Adequacy and Liquidity ✓ Strong catalyst for larger pools of Debt Capital ✓ Enables us to explore growth opportunities, both organic & inorgan
Slide 6: Discussion Summary
Discussion Summary ❖ Brookfield investment in IndoStar Capital ❖ Quarterly Results ❖ Shareholding Structure
Slide 7: Q3FY20 performance: Key Highlights
Q3FY20 performance : Key Highlights ▪ Strong retail franchise ~ 70% of AUM (from 30% in Jun-18) ▪ 11x growth in CV AUM over Jun 18 ▪ 3x growth in Retail AUM over Jun 18 Execution of Retailisation theme ▪ Execution of ICICI partnership gaining momentum ▪ AUM of ~ ₹ 5,000 mn ▪ Monthly run rate of ~ ₹
Slide 8: Q3 & 9MFY20: Consolidated Profit & Loss Statement
Q3 & 9MFY20: Consolidated Profit & Loss Statement Particulars (₹ mn) Q3FY20 Q2 FY20 QoQ % Q3FY19 YOY % 9MFY20 9MFY19 YoY % Revenue from Operations 3,658 4,239 -14% 3,212 14% 12,088 8,800 37% Interest Expenses (1,801) (2,042) -12% (1,474) 22% (6,097) (3,997) 53% Net Revenue from Operations 1,856 2,19
Slide 9: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (₹ mn) Dec-19 Sep-19 QoQ % Dec-18 YoY % Equity 30,953 31,022 0% 29,282 6% Borrowings 63,541 76,246 -17% 62,223 2% Other Liabilities 320 384 Total Liabilities 94,494 107,588 -12% 91,889 3% Loan Assets 84,352 90,590 -7% 76,508 10% Treasury Assets 5,591 13,121 -57
Slide 10: Q3FY20: Business Segment Performance
Q3FY20: Business Segment Performance Corporate SME Housing Particulars (₹ mn) CV Finance Consolidated ^ ^ Lending Finance Finance Revenue from Operations 1,288 1,585 441 245 3,658 Interest Expenses (648) (613) (260) (121) (1,801) Net Interest Income 640 971 181 124 1,856 People Costs 40 206 45 58 43
Slide 11: 9MFY20: Business Segment Performance
9MFY20: Business Segment Performance Corporate CV SME Housing Particulars (₹ Mn) Consolidated ^ Lending Finance Finance Finance Revenue from Operations 4,457 4,772 1,708 723 12,088 Interest Expenses (2,320) (1,929) (915) (357) (6,097) Net Interest Income 2,137 2,842 793 366 5,991 People Costs 130 68
Slide 12: Diversified Funding Profile
Diversified Funding Profile Funding Mix - Sep 2019 Funding Mix - Dec 2019 Others 6% Equity 33% Equity Others 29% 13% CP 2% NCD Banks 21% Banks NCD 35% 37% 24% Incremental Funding mobilized Strong Credit Ratings ₹ mn Q4FY19 Q1FY20 Q2FY20 Q3FY20 Total Borrowing Type Rating Firm Ratings Banks 8,020 4,4
Slide 13: Strong Liquidity Position
Strong Liquidity Position Particulars ₹ mn Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Opening Cash & Equivalents* 8,751 7,591 9,271 10,601 13,301 Loan repayment inflows [Principal] 4,030 5,720 5,580 6,300 5,540 Total Inflow 12,781 13,311 14,851 16,901 18,841 Liability Repayment [Principal] Commercial Paper
Slide 14: Post integration branch rationalisation on course
National Footprint Post integration branch rationalisation on course 233 branches across 18 states 12 2 * Some branches have multiple operating segments 322 322 322 9 233 2 129 159 4 305 305 305 11 222 24 114 55 55 55 55 48 21 10 10 10 10 10 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 SME Finance Housing Fin
Slide 15: Q3FY20: Quarterly Performance Trend (1/2)
Q3FY20: Quarterly Performance Trend (1/2) AUM (₹ mn) Loan Disbursements (₹ mn) On-book Loans Off-book Loans AUM Corporate Lending Retail Finance Total 117,352 115,792 107,181 102,219 20,280 77,482 15,130 14,224 16,591 17,867 12,357 8,675 975 8,546 8,759 102,222 101,568 90,590 7,570 6,612 76,508 84,3
Slide 16: Q3FY20: Quarterly Performance Trend (2/2)
Q3FY20: Quarterly Performance Trend (2/2) NPA* PAT (₹ mn) GNPA NNPA 739 4.7% 4.4% 713 3.7% 471 494 2.6% 3.7% 3.5% 0.9% 3.0% 1.7% 2 0.6% & & & & Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 & Including NPAs from IIFL portfolio * GNPA & NNPA represents Stage 3 Assets Net worth
Slide 17: Asset Quality: Significant reduction in Retail NPAs
Asset Quality : Significant reduction in Retail NPAs Gross NPA (₹ mn) Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Corporate Lending 136 - 1,546 1,546 1,546 CV Finance 11 2,226 2,651 1,411 1,946 SME Finance 574 545 677 437 267 Housing Finance 3 7 19 26 51 Total 724 2,778 4,893 3,420 3,811 Net NPA (₹ mn) Q3FY1
Slide 18: Corporate Lending: Cautious approach continues (1/3)
Corporate Lending : Cautious approach continues (1/3) Corporate Lending AUM (₹ mn) AUM Breakup: RE vs. Non-RE 44,803 45,270 43,067 19% 36% 27% 36,267 44% 38% 31,646 73% 81% 56% 62% 64% Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Real Estate Non Real Estate • Continued reduc
Slide 19: Corporate Lending: Profit and Loss (2/3)
Corporate Lending: Profit and Loss (2/3) Particulars (₹ mn) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Revenue from Operations 1,940 1,817 1,676 1,494 1,288 Interest Expenses (789) (790) (883) (789) (648) Net Interest Income 1,151 1,028 793 704 640 People Costs 23 108 49 42 40 Operating Expenses 1
Slide 20: Corporate Lending: Key ratios (3/3)
Corporate Lending : Key ratios (3/3) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Revenue from Operations * 15.7% 15.6% 14.7% 14.9% 14.7% Net Interest Income * 9.3% 8.8% 6.9% 7.0% 7.3% Operating Expenses * 0.2% 0.9% 0.4% 0.4% 0.6% Cost / Income 2.1% 10.7% 6.2% 6.1% 7.7% Pre-provision Operating Profi
Slide 21: On track to attain 75-25 Retail Corporate AUM mix by March-20
On track to attain 75-25 Retail Corporate AUM mix by March-20 AUM: CL vs Retail (%) Disbursements: CL vs Retail (%) 77,482 1,17,352 1,15,792 1,07,181 1,02,219 8,546 20,280 12,357 6,612 8,759 42% 43% 61% 61% 57% 63% 66% 67% 67% 69% 58% 57% 39% 43% 39% 37% 34% 31% 33% 33% Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY
Slide 22: Calibration in retail business volumes
Calibration in retail business volumes Retail AUM (₹ mn) Retail Disbursements (₹ mn) 8,675 72,083 72,726 70,914 7,570 70,574 1,308 5,478 6,364 7,080 7,699 1,014 1,530 5,690 5,904 18,849 19,017 1,384 18,637 17,968 866 1,049 745 32,680 1,094 3,742 4,241 921 5,837 47,756 47,345 5,172 664 45,197 44,907
Slide 23: CV Finance: Transitioning to leverage ICICI partnership (1/3)
CV Finance : Transitioning to leverage ICICI partnership (1/3) CV Finance – Monthly Disbursement Trend (₹ mn) 2,807 2,452 1,777 1,520 1,510 1600 1,427 1120 1,054 1,089 732 371 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 ✓ CV Finance AUM ₹ 44,907 mn; Up nearly
Slide 24: CV Finance: Profit and Loss (2/3)
CV Finance : Profit and Loss (2/3) Particulars (₹ mn) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Revenue from Operations 346 542 1,506 1,681 1,585 Interest Expenses (139) (204) (673) (643) (613) Net Interest Income 207 338 833 1,038 971 People Costs 97 149 255 225 206 Operating Expenses 117 115 139 14
Slide 25: CV Finance: Key ratios (3/3)
CV Finance : Key ratios (3/3) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Branches & Employees Revenue from Operations * 17.1% 18.7% 16.6% 18.4% 18.4% Net Interest Income * 10.3% 11.6% 9.2% 11.4% 11.3% 350 305 305 305 3,000 Operating Expenses * 10.6% 9.1% 4.3% 4.0% 3.8% 300 2,500 222 Cost / Income 103.
Slide 26: SME Finance: Business volumes (1/3)
SME Finance : Business volumes (1/3) SME Finance – Monthly Disbursement Trend (₹ mn) 560 575 530 440 465 344 256 234 242 242 261 174 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 ✓ Disbursement during Q3FY20 : ₹ 745 mn ✓ Loans assigned / securitised : ₹2,280 mn
Slide 27: SME Finance: Profit and Loss (2/3)
SME Finance: Profit and Loss (2/3) Particulars (₹ mn) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Revenue from Operations 594 585 587 679 441 Interest Expenses (303) (309) (341) (314) (260) Net Interest Income 292 276 247 365 181 People Costs 40 38 46 47 45 Operating Expenses 21 23 24 32 33 Pre-pro
Slide 28: SME Finance: Key ratios (3/3)
SME Finance : Key ratios (3/3) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Revenue from Operations * 13.0% 13.3% 13.6% 17.1% 12.9% Branches & Employees Net Interest Income * 6.4% 6.3% 5.7% 9.2% 5.3% Operating Expenses * 1.3% 1.4% 1.6% 2.0% 2.3% 86 84 98 93 89 Cost / Income 20.8% 22.3% 28.4% 21.5% 4
Slide 29: Housing Finance: Business Volumes (1/3)
Housing Finance: Business Volumes (1/3) Housing Finance – Monthly Disbursement Trend (₹ mn) 430 440 438 373 308 333 316 320 311 286 267 288 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 ✓Q3FY20 disbursements ₹ 866 mn 28
Slide 30: Housing Finance: Profit and Loss (2/3)
Housing Finance: Profit and Loss (2/3) Particulars (₹ mn) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Revenue from Operations 133 189 220 259 245 Interest Expenses (63) (84) (112) (124) (121) Net Interest Income 70 105 108 134 124 People Costs 81 28 55 60 58 Operating Expenses 24 28 24 25 31 Pre-provis
Slide 31: Housing Finance: Key ratios (3/3)
Housing Finance : Key ratios (3/3) Q3 FY 19 Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Branches & Employees Revenue from Operations * 14.3% 15.8% 15.7% 16.5% 15.3% Net Interest Income * 7.6% 8.8% 7.7% 8.6% 7.8% Operating Expenses * 11.3% 4.7% 5.7% 5.4% 5.5% 370 354 324 329 319 Cost / Income 148.3% 53.2% 74.1%
Slide 32: In Summary....
In Summary…. ✓ Brookfield investment reaffirms confidence in our business model and management ✓ On track to achieve a Retail Corporate AUM mix of 75-25 by March-20 ✓ Near-term economic climate will pressure growth and portfolio quality ✓ Proactively reducing Corporate Lending AUM ✓ Shoring up provi
Slide 33: Entrepreneurial Leadership Team with Strong Sponsor Backing
Entrepreneurial Leadership Team with Strong Sponsor Backing ✓ Several years of experience and in-depth understanding of the specific industry and geographic regions ✓ Separate business & credit heads for each vertical ✓ Strong alignment through large ESOP program (8.5% of diluted shares) ◼ 20+ years
Slide 34: Entrepreneurial Leadership Team with Strong Sponsor Backing
Entrepreneurial Leadership Team with Strong Sponsor Backing ◼ 24 years of experience with ◼ 20 years of experience financial Institutions with banks & financial ◼ 21 years of experience with banks Institutions & financial Institutions ◼ Previously worked with Fullerton India, Citigroup, ◼ Previously
Slide 35: Strong & Distinguished Board
Strong & Distinguished Board ✓ 13 committees composed of independent and non-independent directors and also employees1 ✓ Distinct and delineated responsibilities to ensure good corporate governance ✓ Strong capital sponsorship also providing access to best industry practices and international corpor
Slide 36: Robust Risk Management Framework
Robust Risk Management Framework Organizational Framework Aligned Strong Credit / Underwriting Processes Followed by to Mitigate Risk Robust Monitoring Mechanism Business National Credit National Ops 1 Structured Credit Appraisal / Approvals Head Manager Head • Corporate: Pre-screened by corporate l
Slide 37: Discussion Summary
Discussion Summary ❖ Brookfield investment in IndoStar Capital ❖ Quarterly Results ❖ Shareholding Structure
Slide 38: Promoters Shareholding Structure
Promoters Shareholding Structure Everstone1 48.00 % 57.00% Indostar Capital3 100.0% (Promoter) IndoStar Capital Finance Limited 52.00 % Promoter Group4 Other Investors2 3.74% Strong capital sponsorship of Everstone Group 7 ‘Private Equity Firm of the Year in India’ India and SEA US$5.0bn focused AuM
Slide 39: Shareholding Pattern
Shareholding Pattern Shareholding @ 31 December 2019 Major Shareholders Foreign Promoter & Promoter Group Body Company 2.4% Trusts Corporates Management Team and Employees* 1.8% 0.6% SBI MF Insurance 4.2% Lenarco (Advent) ICICI Prudential Life Insurance Others 10.1% Fidelity Emerging Markets Fund HD
Slide 40: For Further Queries
For Further Queries Amol Joshi Chief Financial Officer Contact No: +91 22 4315 7090 Email - ajoshi@indostarcapital.com Rajagopal Ramanathan IRO Contact No: +91 22 4315 7068 Email - rramanathan@indostarcapital.com
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