Satin Creditcare Network Ltd · NSE:SATIN
Satin Creditcare Network — Q1 FY2019 Earnings Presentation
61 slides from Satin Creditcare Network's earnings presentation, August 2018
Slide 1: Satin Creditcare Network Limited Q1FY19 Corporate Presentation
SATIN CREDITCARE NETWORK LIMITED Q1FY19 CORPORATE PRESENTATION AUGUST 2018 BSE: 539404 | NSE: SATIN Corporate Identity No. L65991DL1990PLC041796
Slide 2: Disclaimer
Disclaimer By accessing this presentation, you agree to be bound by the following terms and conditions. This presentation (which may reflect some price sensitive information in terms of SEBI regulations and Companies Act, 2013, as amended from time to time) has been prepared by Satin Creditcare Netw
Slide 3: Contents
Contents Details Satin Overview 3 Key Investment Thesis 7 Future Business Strategy 31 Conclusion 34 Annexure Industry Overview – BC Operations, MSME Finance and Small Ticket Housing Finance 37 Financial & Operational Details – Consolidated 41 Financial & Operational Details – Standalone 47 Financial
Slide 4: Satin Overview
Satin Overview
Slide 5: Company Overview
Company Overview Business Overview Marquee Shareholder Base India’s second largest NBFC-MFI in terms of Gross Loan Portfolio (“GLP” or “Gross AUM”)(1) As on June 30, 2018 Led by Mr. HP Singh, who has experience of over 3 decades in retail finance industry and Promoter & supported by an experienc
Slide 6: Key Milestones
Key Milestones 20 years to reach AUM of Rs 100 Cr; next 8 years to reach AUM of Rs. 5,000 Cr Business Timeline Registers as JLG business shows Receives MIX Reaches 0.49 mn active clients & gross Listing on NSE, Reaches 2.71 mn active Date of inception NBFC strong asset quality Social Performance AUM
Slide 7: Select Accolades & Key Highlights
Select Accolades & Key Highlights Award by Client Protection Certificate First Direct Equity Investment in Microfinance by Asian MF Transparency Organization Smart Campaign - 2016 Development Bank Featured in “Fortune The Next 500” in July 2018 Winner of “Best NBFC-MFI Award” in 2017 & Runner-
Slide 8: Key Investment Thesis
Key Investment Thesis
Slide 9: Key Investment Thesis
Key Investment Thesis 9 1 Robust industry Experienced fundamentals management with strong team regulatory 8 support Excellent 2 Management Backed by Large, of Demonetization Marquee Institutional while meeting Investors credit obligations Strong operational Robust Fundamentals capabilities backed an
Slide 10: Robust Industry Fundamentals with Strong Regulatory Support - Growth to Continue
Robust Industry Fundamentals with Strong Regulatory Support - 1 Growth to Continue Industry Snapshot NBFCs gaining market share in microfinance industry Massive Govt. thrust to boost financial Low penetration of banking Share of GLP of NBFCs vis-à-vis Banks inclusion - NBFC-MFIs (with 45mn credit
Slide 11: Low Penetration of MFI in India – Structural Growth Driver
Low Penetration of MFI in India – Structural Growth Driver Northern and western states are relatively under penetrated Top 10 states having 86% market share in Mar’2018 State-wise MFI penetration data(1) Market Share (%) Jharkhand Others Karnataka 3% 14% 13% 0% Kerala Odisha 4% 11% West Bengal 0% Ut
Slide 12: Satin Surges Ahead Faster Than Industry
Satin Surges Ahead Faster Than Industry Industry is growing in last 5 years at a CAGR of ~26% Despite the setback of demonetization, Satin growing at a healthy rate 781,130 616,230 57,568 505,350 40,666 383,860 32,708 244,990 21,406 10,560 MAR'14 MAR'15 MAR'16 MAR'17 MAR'18 MAR'14 MAR'15 MAR'16 MAR'
Slide 13: Excellent Management of Demonetization
2 Excellent Management of Demonetization Strong Recovery in Collection Efficiency 100% 103% 103% 98% 98% 85% 70% 72% Nov-16 Dec-16 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 • Collection efficiency of newly acquired clients (from 1st Jan 2017 to 30th Jun 2018) stood at 99.6% Note: Data for Microfinan
Slide 14: PAR and Expected Credit Loss (ECL)
PAR and Expected Credit Loss (ECL) Gradual improvement in PAR across buckets indicates that the worst is over(1) ECL methodology prescribed in IND AS is based on the principle of providing for expected future losses, rather than incurred losses. Expected Credit Loss (ECL): Probability of credit loss
Slide 15: Strong Client Demand resulting in Rebound in Disbursements
Strong Client Demand resulting in Rebound in Disbursements, along with Rapid scaling up of Cashless Disbursements Return to Normal Disbursement Levels1 FY17 FY18 FY19 o Disbursement in Q1 usually remains low 658 o Q3FY17 is impacted due to demonetisation 444 456 419 383 397 356 283 97 Apr-Jun Jul-Se
Slide 16: Strong Capitalization
Strong Capitalization Healthy CRAR to help Capitalize on Growth Opportunities Net Worth (Rs. Mn) CRAR (Tier I + Tier II)[1] Tier - I Tier - II 24.14% 23.65% 26.36% 3.35% 6.47% 7.56% 9,038 9,642 20.30% 19.89% 16.58% 4,650 FY18 Q1FY18 Q1FY19 FY17 FY18 Q1FY19 • Tie-up with IndusInd Bank for business co
Slide 17: Track Record of Delivering Growth
Track Record of Delivering Growth Gross Income (Rs. Mn) Cost to Income Ratio (%) 59.2% 55.2% 49.1% 9,907 3,177 2,427 FY18 Q1FY18 Q1FY19 FY18 Q1FY18 Q1FY19 NII1 and PAT (Rs. mn) Opex to GLP (%) NII PAT 6.8% 4,584 877 1,640 6.2% 1,141 251 6.2% -822 FY18 Q1FY18 Q1FY19 FY18 Q1 FY18 Q1 FY19 Note: Data on
Slide 18: Operational Highlights (1/3)
Operational Highlights (1/3) Districts, States and Branches Employees & Loan Officers 60242 10171 6,382 995 4,481 431 767 18 9,004 93684 18 2,684 16 16 1,377 1,344 18 267 1,710 3.8x 6,910 11 1,109 12 302 307 7,6533 7,9513 215 235 6 5,801 121 3,918 2,496 0 FY15 FY16 FY17 FY18 Q1FY19 FY15 FY16 FY17 FY
Slide 19: Operational Highlights (2/3)
Operational Highlights (2/3) Disbursements1 (Rs. mn) & No. of Loans1 (‘000) Disbursement Per Branch2 (Rs. Mn) 1,816 1,566 1,689 1,056 55,717 88.6 83.3 36,061 35,940 464 68.5 57.8* 23,658 13,328 15.8 FY15 FY16 FY17 FY18 Q1FY19 FY15 FY16 FY17 FY18 Q1FY19 No. of Loans *Disbursements during FY17 impacte
Slide 20: Operational Highlights (3/3)
Operational Highlights (3/3) GLP/Branch – MFI Lending1 (Rs. Mn) GLP/Loan Officer – MFI Lending1 (Rs. Mn) 75.6 12.1 62.3 63.8 10.4 58.3 9.5 9.1 9.2 8.7 48.8 8.0 41.0 40.0 FY16 FY17 FY18 Q1FY19 FY16 FY17 FY18 Q1FY19 GLP/Branch Industry Average GLP/Loan Officer Industry Average No. of Clients/ Loan Off
Slide 21: Strong Client Relationships with Transparent Operations
4 Strong Client Relationships with Transparent Operations Trend in Loan Cycle Transparent Operations Pricing Loan Card with Focus on further strengthening client relationships - Clients can graduate from Smart Campaign – Transparency transparent being the first cycle borrowers under JLG Model to s
Slide 22: Credit Bureau Data For Screening Loan Applications
Credit Bureau Data For Screening Loan Applications Hit Rate- For All Products-Q1FY19 CB Rejection Reason-Q1FY19 Over- Ticket Size, 2% No Hit, 21% indebtedness, 12% Defaulter, 17% Hit, 79% >1 MFI, 69% SCNL Guidelines Rejection Rate for all products is ~12% for Q1FY19 MFIN Limit RBI Guidelines Guideli
Slide 23: Diversification – By Product
5 Diversification – By Product Existing Product New Products with Large Target Markets BC Services Affordable Strategic Tie- MFI MSME Housing Ups 1. Tie-up with IndusInd Started in FY09 Started in FY17 Acquired in FY17 Started operations: Feb’18 • To act as BC for MFI • Total AUM under MFI • Launche
Slide 24: Company’s Product Mix - MSME started in FY17, has gained traction
Company’s Product Mix - MSME started in FY17, has gained traction Business Correspondent MFI Segment(1) Non-MFI Segment Housing Finance services Satin Housing Finance Product features as on Jun’18 MFI Lending Loans to MSME(2) TSL(3) Ltd(4) Start Date May’08 (JLG) Apr’16 May’12(3) Feb’18 Rs. 100,000
Slide 25: Diversification – By Geography
Diversification – By Geography Management Focus is on Geographic Diversification1 Areas of operations – Reducing Geographic concentration GLP - Q1 FY15 – Q1 FY19 FY15 GLP States FY19 Change Q1FY19 (Rs.mn) 21,407 32,708 40,665 57,568 60,257 % mix % mix (Rs. mn) CAGR % Uttar Pradesh 14,716 24.4% 43.3%
Slide 26: Strong Presence in Underpenetrated MFI Regions
Strong Presence in Underpenetrated MFI Regions Satin is Present Predominantly in States of Low Top States with Highest MFI Client Concentration MFI Penetration MFI MFI Satin’s Population YoY growth % Satin YoY Q1FY19 • Clients 4 penetration market Q1FY19 With presence in 18 states1, Satin is steadil
Slide 27: Improving Liability Profile and Strong Liquidity Position
6 Improving Liability Profile and Strong Liquidity Position Diversification of funding mix Benefit of positive ALM continues Source of funds raised during the period ALM (No. of Months)1 21.3% 17.3% 36.1% 5.4% 28.6% 3.7% 39.7% 10.9% 6.4% 1.4% 12.2% 8.8% 7.6% 12.9% 24.9% 57.5% 13.6% 19.3% 21.5 22.3 2
Slide 28: Robust Digital Ecosystem
7 Operational Capabilities Backed by Robust IT Infrastructure Digital transformation implemented across all branches in less than 3 months (From 21 Apr’17 to 03 Jul’17) ADVANTAGES OF LMS Provided TABs and internet Robust Digital Ecosystem connectivity at all branches (Loan Management System) 21 Days
Slide 29: Technology Revamp – To help realize operational efficiencies
Technology Revamp– To help realize operational efficiencies Significant reduction in disbursement turnaround time to existing customers post migration to new system Cashless Collection (pilot) Previous System KYC and Bank Information Loan Processing at RO Confirmation by BM Disbursement by HO Team C
Slide 30: Backed by Large, Marquee Institutional Investors
8 Backed by Large, Marquee Institutional Investors 7 rounds of equity capital raise with marquee investors with complete profitable exits to 3 investors Investor confidence Raised Rs. 2,500 mn from marquee institutions via QIP in Oct 2016. Further raised Rs. 1,500 mn in Oct 2017 via QIP from lar
Slide 31: Experienced Management Team
9 Experienced Management Team Mr. Sanjeev Vij, CEO, Taraashna Services Limited Mr. HP Singh, Chairman cum Managing Director • 27 years of experience having previously worked at Tata • Has over 3 decades of retail microfinance experience Motor Finance Sols., Bajaj Finance, RBS, Citicorp Finance • Law
Slide 32: Future Business Strategy
Future Business Strategy
Slide 33: Future Business Strategy
Future Business Strategy Core operations (MFI Lending) Market size(1) Focus on improving collections and GLP growth momentum Rs. 684 bn market; expected to grow at 26% CAGR over next 4 years Geographic diversification – Broad base operations and reduce any geographic GLP (INR bn) concentration i
Slide 34: Future Business Strategy
Future Business Strategy New Products MSME Housing Finance Large NBFC Tie Up Market size (Rs bn) Market size (Rs bn) 15,539 Strategic tie up with large NBFC to 19,205 distribute its non-MFI financial products 16,717 13,140 13,955 7,805 across the branch network of Satin 11,345 11,733 6,786 Focus
Slide 35: Conclusion
Conclusion
Slide 36: Shaping up of a Future ready Business model
Shaping up of a Future ready Business model While the industry was grappling with collections and significant portion of our AUM was in affected geographies, our efforts persisted on several other fronts Technology revamp leading to operational efficiencies Focus on Product Portfolio Saved signifi
Slide 37: Guidance for FY19
Guidance for FY19(1) AUM growth 40%+ ROA 2.3%+ Note: (1) On a Consolidated basis; 36
Slide 38: Annexure: Industry Overview
Annexure Industry Overview -BC Operations, MSME Finance and Small Ticket Housing Finance
Slide 39: BC Operations
BC Operations Number of BC transactions to soar given lower cost of operations BC portfolio of NBFC-MFIs on the rise BC Transactions – Value (Rs. Bn) and Volume (Mn) BC Portfolio of NBFC – MFI (Rs. Bn) 23,858 33% 31% 32% 25% 27% 23% 22% 24% 14,911 12% 9,037 5,316 5,720 3,038 27.0 29.3 27.3 29.8 524
Slide 40: Micro, small and medium enterprise (MSME) finance
Micro, small and medium enterprise (MSME) finance Share of NBFCs and private banks to increase in MSMSE credit NBFCs’ MSME credit to sustain impressive growth Share of MSME Finance By Institutions GLP (Rs. Bn) 1,821 5.3% 6.4% 7.2% 8.1% 8.9% 9.5% 2.5% 3.0% 2.9% 2.9% 1,505 3.0% 3.0% 24.8% 26.0% 27.0%
Slide 41: Small Ticket Housing Finance
Small Ticket Housing Finance Healthy growth expected in low ticket housing finance segment Key Growth Drivers Thrust on low ticket housing with Govt. initiatives like ‘Housing for All’ to Loan book – less than Rs. 2.5 Miilion boost growth and help increase share 15,539 Pradhan Mantri Awas Yojana
Slide 42: Financial & Operational Details – Consolidated
Annexure Financial & Operational Details – Consolidated
Slide 43: Business Details – Consolidated
Business Details – Consolidated PARTICULARS Q1 FY19 Q1 FY18 YoY % FY18 AUM (Rs. mn) 60,257 42,204 42.8% 57,568 On-Book AUM 45,529 35,292 29.0% 43,028 Securitization/ Assignment 7,999 2,414 231.3% 7,820 Business Correspondence – IndusInd Bank 474 - - TSL - Business Correspondence 6,136 4,497 36.4% 6,
Slide 44: Business Details – Consolidated (Contd)
Business Details – Consolidated (Contd) PARTICULARS Q1FY19 Q1FY18 YoY % FY2018 No. of Active Customers 3,002,567 2,629,078 14.2% 2,815,582 SCNL 2,582,232 2,273,285 13.6% 2,401,701 TSL 420,244 355,793 18.1% 413,865 SHFL 91 16 Average Ticket Size MFI Lending (SCNL) 29,000 30,000 -3.3% 30,000 Product F
Slide 45: P&L Statement – Consolidated (Quarterly)
P&L Statement – Consolidated (Quarterly) Particulars (Rs mn) Q1 FY19 Q1 FY18 YoY% FY18 Revenue Interest and Fee Income 3,010 2,222 35% 9,217 Treasury Income 169 200 -15% 691 Service Charges 175 105 66% 526 Other Operating Income 5 12 -60% 17 Total Revenue 3,359 2,539 32% 10,452 Expenses Finance Cost
Slide 46: Profit Reconciliation – Consolidated
Profit Reconciliation – Consolidated PARTICULARS (Rs. mn) Q1 FY19 Q1 FY18 FY18 Profit and Loss as per IGAAP 317.5 (798.5) (34.3) Measurement of financial assets and financial (12.4) (12.1) (349.0) Impact of amortization of following using the EIR method: liabilities at amortised cost • Processing fe
Slide 47: Net worth reconciliation – Consolidated
Net worth reconciliation – Consolidated Particulars As at As at Explanation Mar 31, 2018 Apr 1, 2017 (Rs in mn) (Rs in mn) Net worth as per IGAAP *10,908.5 *6,648.7 Measurement of financial assets and financial (316.9) (3.2) Impact of amortization of following using the EIR method: liabilities at am
Slide 48: Financial & Operational Details – Standalone
Annexure Financial & Operational Details – Standalone
Slide 49: Operational Details – Standalone (Quarterly)
Operational Details – Standalone (Quarterly) PARTICULARS Q1FY19 Q1FY18 YoY % Q4FY18 Gross AUM (Rs. mn) 54,002 37,706 43.2% 50,848 No. of districts 307 244 25.8% 302 No. of branches 838 634 32.2% 809 No. of States of operation 18 17 5.9% 18 No. of Employees 7,951 6,032 31.8% 7,653 No. of Loan Officer
Slide 50: Operational Details - Standalone (Quarterly contd…)
Operational Details - Standalone (Quarterly contd…) PARTICULARS Q1FY19 Q1FY18 Q4FY18 YoY % Product Financing Gross AUM (Rs. mn) 13 0 1.35 No. of Loan Accounts 3,174 182 732 Disbursement during the period (Rs. mn) 13.15 - 1.78 No. of loans disbursed during the period 2,832 - 581 Average Ticket Size (
Slide 51: Financial Performance – Standalone (Quarterly)
Financial Performance – Standalone (Quarterly) RoE Tree Q1 FY19 Q1 FY18 FY18 Gross Yield (1) 23.54% 23.65% 22.58% Financial Cost Ratio(2) 11.73% 13.92% 12.23% Net Interest Margin(3) 11.82% 9.73% 10.35% Operating Expense ratio(4) 6.15% 6.83% 6.27% Loan Loss Ratio(5) 2.77% 16.59% 1.03% RoA(6) 1.52% -6
Slide 52: P&L Statement – Standalone (Quarterly)
P&L Statement – Standalone (Quarterly) Particulars (Rs mn) Q1 FY19 Q1 FY18 YoY% FY18 Revenue Interest and Fee Income 3,008 2,222 35% 9,195 Treasury Income 163 195 -16% 691 Service Charges 4 3 37% 9 Other Operating Income 2 7 -65% 12 Total Revenue 3,177 2,427 31% 9,907 Expenses Finance Cost 1,537 1,2
Slide 53: Profit Reconciliation – Standalone
Profit Reconciliation – Standalone PARTICULARS (Rs. mn) Q1 FY19 Q1 FY18 FY18 Explanations Profit and Loss as per IGAAP 292.8 (780.3) 40.3 Measurement of financial assets and (11.9) (12.9) (348.4) Impact of amortization of following using the EIR method: financial liabilities at amortised cost • Proc
Slide 54: Net worth reconciliation – Standalone
Net worth reconciliation – Standalone Particulars As at As at Explanation Mar 31, 2018 Apr 1, 2017 (Rs in mn) (Rs in mn) Net worth as per IGAAP * 10,950.6 *6,622.2 Measurement of financial assets and financial (316.7) (3.6) Impact of amortization of following using the EIR method: liabilities at amo
Slide 55: Financial & Operational Details - TSL
Annexure Financial & Operational Details - TSL
Slide 56: Operational Details – TSL
Operational Details – TSL PARTICULARS Q1 FY19 Q1 FY18 YoY % FY18 Gross AUM (Rs. mn) 6,136 5,771 36.4% 6,699 No. of districts 102 84 21.4% 95 No. of branches 177 170 10.6% 184 No. of Regional Offices (RO) 7 7 0.0% 7 No. of States of operation 8 8 0.0% 8 No. of Employees 1,377 1,259 11.7% 1,344 No. of
Slide 57: P&L Statement – TSL
P&L Statement – TSL Particulars (Rs mn) Q1 FY19 Q1 FY18 YoY% FY18 Revenue Service Charges 172 103 67.3% 518 Treasury Income 4 4 18.4% 16 Other Income 2 5 -53.5% 5 Total Revenue 178 111 60.3% 539 Expenses Finance Cost 8 6 31.7% 25 Employee Benefit Expenses 94 72 29.6% 303 Credit Cost - - - - Other ex
Slide 58: Financial & Operational Details – Satin Housing Finance Limited (SHFL)
Annexure Financial & Operational Details – Satin Housing Finance Limited (SHFL)
Slide 59: Financial & Operational Details – SHFL
Financial & Operational Details – SHFL* Particulars (Rs mn) Q1 FY19 Q1 FY18 YoY% FY18 Revenue Interest and Fee Income 2.45 - 0.57 Treasury Income 1.77 0.82 116.5% 5.82 Other income 0.01 - 0.00 Total Revenue 4.24 0.82 417.8% 6.39 Expenses Finance cost 0.02 - 0.00 Employee benefit expenses 8.73 1.34 5
Slide 60: Contact Information
Contact Information For any queries, please contact: Aditi Singh Head – Capital Markets Satin Creditcare Network Limited E: Aditi.singh@satincreditcare.com T: +91 124 4715 400 (Ext – 222) 59
Slide 61: Thank You
Thank You
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