Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q3 FY2021 Earnings Presentation
54 slides from Edelweiss Financial Services's earnings presentation, February 2021
Slide 1: Edelweiss Financial Services Limited Q3FY21 Earnings Update
Edelweiss Financial Services Limited Q3FY21 Earnings Update
Slide 2: Contents
Contents 1 Q3FY21 Highlights 3 2 Business Update 20 3 Balance Sheet Highlights 44 4 Governance and Sustainability 48 2
Slide 3: Q3FY21 Highlights
Q3FY21 Highlights oO Edelweiss Ideas create, values protect
Slide 4: Edelweiss at a Glance – Q3FY21
Edelweiss at a Glance – Q3FY21 Net Worth Liquidity INR 8,095 Cr INR 6,200 Cr Customer Assets Book Value INR 2,65,100 Cr INR 66 Face Value ₹1 4
Slide 5: We Are In Three Business Verticals Across Ten Key Entities
We Are In Three Business Verticals Across Ten Key Entities Edelweiss Financial Services Ltd (EFSL) Housing Wealth Asset Asset General Insurance NBFC Life Insurance Finance Management Management Reconstruction Insurance Broking • ECL Finance • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss
Slide 6: Well-Capitalised Businesses And Robust Customer Franchise
Well-Capitalised Businesses And Robust Customer Franchise Businesses Entity Edelweiss Holding Equity (INR Cr) Metric Value NBFC ECLF & ERFL 100% 3,708 CAPAD 24.1% / 33.1% Housing Finance EHFL 100% 782 CAPAD 23.7% Wealth Management ESL 100% 1,392 AUA ~INR 1,45,100 Cr Mutual Fund EAML 100% 161 AUM ~IN
Slide 7: Q3FY21 Result Highlights (1)
Q3FY21 Result Highlights (1) • Commenced disbursement in select areas; Disbursed ~INR 150 Cr in this quarter Housing Finance • Asset Light model with focus on AUM growth; continued securitization in Q3FY21 • Pivoting to asset - light MSME credit in order to get back to profitability NBFC • Workouts
Slide 8: Q3FY21 Result Highlights (2)
Q3FY21 Result Highlights (2) Asset • Robust recoveries of ~INR 2,200 Cr in Q3FY21 from 103 borrowers even with IBC Reconstruction suspension Life Insurance • 11% YoY growth this quarter in Individual APE; industry witnessed decline in growth General • 50% YoY Gross Direct Premium Income (GDPI) growt
Slide 9: Distribution of Earnings Across Businesses
Distribution of Earnings Across Businesses Businesses (INR Cr) Key Entities Q3FY21 9MFY21 NBFC ECLF & ERFL 14 (102) Housing Finance EHFL (1) 13 Wealth Management ESL 39 180 Mutual Fund EAML 1 5 Alternatives Asset Mgt EAAA 8 12 Asset Reconstruction EARC 54 141 Insurance Broking EGIBL 2 4 BMU & Corpor
Slide 10: Our Fee Income Is Back To Pre-Covid Levels
Our Fee Income Is Back To Pre-Covid Levels Fee Income (INR Cr) 489 477 464 411 385 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Robust annuity income from Wealth Management, Asset Management and Asset Reconstruction businesses with additional upside from carry 10
Slide 11: We Have Consistently Provided Higher Than IRAC Norms
We Have Consistently Provided Higher Than IRAC Norms (INR Cr) IRAC Provisions IndAS Provisions 904 758 768 687 714 658 675 440 417 246 222 155 149 154 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 We will continue to provide conservatively until the completion of work outs in wholesale book 11
Slide 12: Update On Our Key Focus Areas
Update On Our Key Focus Areas 1 Reduction in Corporate Credit Exposure 2 Reduction in Debt Equity Ratio 3 Maintaining Asset Quality 4 Reduction in Fixed Costs 5 Maintaining comfortable liquidity 6 Consummation of WM Demerger 12
Slide 13: Corporate Credit Exposure Continues To Scale Down
1 Corporate Credit Exposure Continues To Scale Down Corporate Credit Assets (INR Cr) 17,798 13,928 8,527 Q3FY19 Q3FY20 Q3FY21 Work-outs on the wholesale book is a priority for us 13
Slide 14: Debt Equity Ratio Declined Further
2 Debt Equity Ratio Declined Further D/E (Excl Treasury Assets) 5.2 4.4 3.4 3.5 3.1 3.0 H1FY19 H2FY19 H1FY20 H2FY20 H1FY21 Q3FY21 14
Slide 15: Retail Collection Efficiency Is Strong
3 Retail Collection Efficiency Is Strong Total Retail Credit Collections (INR Cr) 379 341 346 353 267 250 231 107 115 Apr'20 May'20 June'20 July'20 Aug'20 Sept'20 Oct'20 Nov'20 Dec'20 Increased customer engagement has improved collection efficiency to 93% in Q3FY21 15
Slide 16: Cost Rationalisation Measures Under Way
4 Cost Rationalisation Measures Under Way Q3FY21 Fixed Cost comparison (INR Cr) • Achieved cost reduction of 27% in Q3FY21 against average FY20 fixed cost 550 • Targeted reduction of ~25-30% in FY21 against avg 439 FY20 425 400 • Key saving drivers in Q3 vs. Avg. FY20: • People Cost : Decrease of ~2
Slide 17: Maintained Comfortable Liquidity
5 Maintained Comfortable Liquidity % of Borrowings Available Liquidity (INR Cr) 28% 24% 21% 21% 15% Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 10,300 8,150 4,700 6,600 6,200 • Raised ~INR 600 Cr during the quarter • Bought back bonds worth ~INR 650 Cr • Liquidity cushion will be in the range of 15-20% of bo
Slide 18: Progress on WM Demerger Process
6 Progress on WM Demerger Process Transaction is progressing as per plan; PAG investment to come in after receipt of all regulatory approvals NCLT approval for restructuring expected by Q3FY22 WM demerger and listing expected by Q1FY23 18
Slide 19: FY22 and Beyond
FY22 and Beyond Our Future Strategy • Profitable growth from capital - light businesses • Continued value creation • Unlocking value for the benefit of all shareholders Project Udaan - Strategy by Business • Evaluate each of our businesses’ vision and strategic choices in evolving environment • Iden
Slide 20: Business Update
4 ° 3 ' - ‘ : ; : : f : je : ; 4 ' : ' : t be Business Update oO Edelweiss Ideas create, values protect
Slide 21: NBFC: ECLF and ERFL
NBFC NBFC : ECLF and ERFL Q3FY21 Key Metrics Business Update • Total retail collections in 9MFY21 was at ~INR 1,400 ECLF ERFL Cr • During the quarter collection efficiency was at Equity 94% with total retail collections at ~INR 600 Cr 3,205 503 (INR Cr) • Formed dedicated teams led by senior leaders
Slide 22: Business Performance Snapshot: ECLF and ERFL
NBFC Business Performance Snapshot : ECLF and ERFL Q3FY21 (INR Cr) ECLF ERFL Total AUM 10,398 1,441 11,839 Loan Book 9,940 1,332 11,272 Equity 3,205 503 3,708 Net Revenue 13 39 52 Opex 132 8 140 Credit Costs (56) 6 (50) Profit After Tax (8) 22 14 NIM 1.5% 5.2% 1.8% NNPA 2.9% 1.7% 2.8% Total cover 16
Slide 23: Housing Finance: EHFL
Housing Finance Housing Finance: EHFL Q3FY21 Key Metrics Business Update INR Cr 9MFY21 Q3FY21 Equity (INR Cr) 782 Collections ~1,050 ~500 Book Securitized 600 100 Funds raised under PCG Scheme 400 100 CAPAD 23.7% • Focus on asset-light growth • Bought back bonds worth ~INR 120 Cr during current quar
Slide 24: Business Performance Snapshot: EHFL
Housing Finance Business Performance Snapshot : EHFL Q3FY21 INR Cr AUM 4,488 Loan Book 3,582 Equity 782 Net Revenue 31 Opex 26 Credit Costs 17 Profit After Tax (1) NIM 3.3% NNPA 1.4% Total cover 117% CAPAD 23.7% 9MFY21 PAT 13 24
Slide 25: Wealth Management: ESL
WM Wealth Management : ESL Q3FY21 Key Metrics Business Update • Franchise continues dominant presence AUA (INR Cr) ~1,45,100 • AUA grew 30% and Clients grew 22% YoY • Maintained revenue yields within the range of 70-80 bps Net New Money • 90% of revenue comes from fee income 973 (INR Cr) • Started r
Slide 26: Business Performance Snapshot: ESL
WM Business Performance Snapshot : ESL Q3FY21 INR Cr AUA 1,45,100 Equity 1,392 Gross Revenues 306 Net Revenues 251 Operating costs 195 Profit before tax 55 Profit after tax 39 9M C/I 68% 9MFY21 PAT 180 26
Slide 27: Wealth Assets Continues To Maintain Robust Growth
WM Wealth Assets Continues To Maintain Robust Growth Wealth Management AUA (INR Cr) No of Clients (#) 145,100 672,500 375,000 29,500 FY16 Q3FY21 FY16 Q3FY21 27
Slide 28: Closed Marquee Transactions
WM Closed Marquee Transactions Key Equity Capital Market & Advisory Transactions Mazgaon Dock Strategic Sale INR 444 Cr INR 518 Cr INR 1,067 Cr INR 3,788 Cr IPO IPO IPO QIP BRLM BRLM BRLM BRLM Sole Advisor October 2020 November 2020 December 2020 December 2020 December 2020 Key Debt Capital Market T
Slide 29: Mutual Fund: EAML
AM Mutual Fund : EAML Q3FY21 Key Metrics Business Update • Climbed to 15th rank amongst top AMCs in the country from rank 33 in FY16 Equity (INR Cr) 161 • Net equity Q3 inflows of ~INR 1,000 Cr against industry outflows of ~INR 46,000 Cr • Highest net equity inflows (Ex-EPFO contribution) in the AUM
Slide 30: Business Performance Snapshot: EAML
AM Business Performance Snapshot : EAML Q3FY21 INR Cr AUM 49,000 Equity 161 Net Revenues 30 Operating costs 28 Profit before tax 1 Profit after tax 1 9MFY21 PAT 5 30
Slide 31: Mutual Fund Assets Have Achieved Significant Scale
AM Mutual Fund Assets Have Achieved Significant Scale Mutual Fund AUM (INR Cr) Retail Folios (#) 360,000 49,000 29,000 1,600 FY16 Q3FY21 FY16 Q3FY21 31
Slide 32: Consistently Rising Share in Equity Sales and SIPs
AM Consistently Rising Share in Equity Sales and SIPs Mutual Fund Equity Gross Sales (INR Cr) Mutual Fund SIP Flows (INR Cr) 1,6 00 Equity Gross Sales 2.5% SIP Flows SIP Market Share Equity Gross Sales Market Share % 1,4 00 1.3% 2.0% 1.2% 2.0% 1.1% 1,2 00 1.1% 1.0% 1.5% 1,0 00 0.9% 0.7% 0.7% 0.7% 0.
Slide 33: Annuity Income Flows From Long Term Asset Base
AM Annuity Income Flows From Long Term Asset Base Long Term Assets Performance Linked AUM Assets over 3 years duration Share of fixed fee AUM Assets less than 3 years duration Share of performance linked fee AUM 7% 20% Total AUM Total AUM INR 49,000 Cr INR 49,000 Cr 80% 93% 33
Slide 34: Alternatives Asset Management: EAAA
AM Alternatives Asset Management : EAAA Q3FY21 Key Metrics Business Update • With total raise of ~INR 8,800 Cr, FY21 is the largest fund raise year for Alternatives Equity (INR Cr) 32 • Raised INR 6,600 Cr in ESOF III, largest fund raise in India for 2020 AUM (INR Cr) ~30,500 • Steady annuity income
Slide 35: Business Performance Snapshot: EAAA
AM Business Performance Snapshot : EAAA Q3FY21 INR Cr AUM 30,500 Equity 32 Net Revenues 47 Operating costs 39 Profit before tax 8 Profit after tax 8 9MFY21 PAT 12 35
Slide 36: Robust Growth In Alternative Assets
AM Robust Growth In Alternative Assets Alternatives AUM (INR Cr) Alternatives AUM – Strategy wise 30,500 11% 37% 21% INR 30,500 Cr 31% 3,400 Distressed Credit Fund Structured Debt Fund FY16 Q3FY21 Real Estate Credit Fund Infrastructure Fund 36
Slide 37: Asset Reconstruction: EARC
ARC Asset Reconstruction : EARC Q3FY21 Key Metrics Business Update • Gross recoveries of INR 3,615 Cr in 9MFY21 from 139 Equity (INR Cr) 2,177 borrowers • Q3 recoveries at INR 2,200 Cr from 103 borrowers AUM (INR Cr) ~40,800 • Comfortable liquidity position of ~INR 620 Cr as on Dec’20 Recoveries (IN
Slide 38: Business Performance Snapshot: EARC
ARC Business Performance Snapshot : EARC Q3FY21 INR Cr AUM 40,800 Capital Employed 5,000 Equity 2,177 Gross Revenues 228 Net Revenues 101 Operating costs 26 Profit before tax 74 Profit after tax 54 9MFY21 PAT 141 38
Slide 39: Life Insurance: ETLI
Life Insurance Life Insurance : ETLI Q3FY21 Key Metrics Business Update • Registered 2nd Highest Individual APE growth, while Equity (INR Cr) 623 private industry declined by 6% YoY in YTD FY21 Individual APE (INR Cr) 96 • Launched 2 new products: "Covid Shield” and “Income Assure” Policyholder’s AU
Slide 40: Business Performance Snapshot: ETLI
Life Insurance Business Performance Snapshot : ETLI Q3FY21 INR Cr Net Premium Income 286 Investment Income & Other Income 264 Total Business 550 Profit After Tax (41) Minority (20) Edelweiss’ Share in PAT (21) 9MFY21 PAT (167) 40
Slide 41: Among The Fastest Growing In The Industry
Life Insurance Among The Fastest Growing In The Industry Individual APE CAGR Since Q3FY16 vs Industry Individual APE - Outpaced Industry growth YoY during the quarter 29% 11% 13% 9% -9% -14% Edelweiss Tokio Peer Set Industry Edelweiss Tokio Peer Set Industry Life Insurance Life Insurance 41
Slide 42: General Insurance: EGICL
General Insurance General Insurance : EGICL Q3FY21 Key Metrics Business Update • Consistently registering robust growth - ~50% YoY growth Equity (INR Cr) 115 in Q3FY21; Among the fastest growing insurers in the industry • Continuously expanding our digital partnership base GWP (INR Cr) 61 through ad
Slide 43: Fastest Growing Player In The Industry Enabled By Digital Model
Fastest Growing Player In The Industry Enabled By General Insurance Digital Model Robust YoY growth in GDPI in Q3FY21 Strong YoY GDPI performance in Retail Lines compared to the Industry in Q3FY21 38% 50% 21% 21% 8% 5% Edelweiss General Industry Motor Retail Health Insurance Edelweiss General Insura
Slide 44: Balance Sheet Highlights
Balance Sheet Highlights oO Edelweiss Ideas create, values protect
Slide 45: Liquidity & Cash Flow Plan
Liquidity & Cash Flow Plan Particulars (INR Cr) Jan’21-Jun’21 Jul’21-Dec’21 Opening Available Liquidity (A) 6,200 5,800 Inflows Expected Inflows 4,000 4,300 Fresh Borrowings 2,500 2,800 Asset Sell downs 1,500 600 Total Inflows (B) 8,000 7,700 Outflows Repayments 5,900 6,300 Disbursements 2,500 1,900
Slide 46: Borrowing Profile Is Well Diversified
Borrowing Profile Is Well Diversified Borrowing Profile by Instruments Borrowing Profile by Source 2% 21% 34% 42% 10% 64% 27% Loans & OD NCDs CPs Banks Retail MF PF, Insurance & FIs INR 29,413 Cr INR 29,413 Cr 46
Slide 47: Assets in each Tenor Range Adequately Cover Liabilities
Assets in each Tenor Range Adequately Cover Liabilities (INR Cr) Assets Liabilities Gap Upto 1 year 14,400 13,000 1,400 1-3 years 14,250 13,250 1,000 3 years+ 14,750 10,300 4,450 Total gap represents our equity base 47
Slide 48: Governance and Sustainability
Governance and Sustainability
Slide 49: 12 Member Board Comprises Majority of Independent Directors
12 Member Board Comprises Majority of Independent Directors Mr. P N Venkatachalam Dr. Ashima Goyal Independent Director Independent Director • Banking sector expert and former member of the • Professor at Indira Gandhi Institute of Development Research Interim Pension Fund Regulatory Authority of In
Slide 50: Significant Institutional Ownership
Significant Institutional Ownership Shareholding Pattern as on 31st Dec, 2020 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 7.6% Employee 2 BIH SA 5.2% Trust 3 TIAA CREF funds 3.6% DIIs, Non 4.8% Promoter Group Institutions 4 Baron Asset Management 3.3% & Others 21.3% 32.9% 5 LIC 2.2%
Slide 51: Our Sustainability Efforts
Our Sustainability Efforts EdelGive Foundation’s commitment to Achieving the SDGs (Cumulative till Q3FY21) 111 Districts Sustainable Women across 14 States Quality Education Livelihoods Empowerment INR 8.6 Cr* INR 59.79 Cr* INR 63 lakhs* INR 91.34 Cr * 18.41 lakh Children 1,303 acres of irrigated la
Slide 52: EdelGive Funding Partners & Networks
EdelGive Funding Partners & Networks We have partnered with some of the largest Foundations, Corporates and HNIs through our innovative models focused on collaboration 52
Slide 53: Safe Harbour
Safe Harbour DISCLAIMER : This presentation and the discussion may contain certain words or phrases that are forward - looking statements, which are tentative, based on current expectations of the management of Edelweiss Financial Services Ltd. or any of its subsidiaries and associate companies (“Ed
Slide 54: Safe Harbour
Safe Harbour NOTES: Slide 4,5,6,14 : Net worth is including MI and includes investment in equity convertible instrument by CDPQ of INR 866 Cr, Kora Management of INR 177 Cr and Sanaka Capital of INR 117 Cr Slide 4,6,25,26,27,29,30 : Customer Assets, AUM, AUA, clients and folios are rounded off to ne
Edelweiss Financial Services — Q3 FY2021 Earnings Presentation on 6ix