L&t Finance Ltd · NSE:LTF
L&t Finance — Q1 FY22 Earnings Presentation
66 slides from L&t Finance's earnings presentation, Jul 16, 2021
Slide 1: Submission of Investor / Analyst Presentation to exchanges
July 16, 2021 National Stock Exchange of India Limited BSE Limited Exchange Plaza, Corporate Relations Department, Plot No. C/1, G Block, 1st Floor, New Trading Ring, Bandra - Kurla Complex, Bandra (East), P. J. Towers, Dalal Street, Mumbai - 400 051. Mumbai - 400 001. Symbol: L&TFH Security Code No
Slide 2: Strategy & Results Update – Q1FY22
Strategy & Results Update – Q1FY22 1
Slide 3: Disclaimer
Disclaimer The information in this presentation is provided by L&T Finance Holdings Limited (the “Company”) for information purpose only. This presentation or any information therein may not be used, reproduced, copied, photocopied, duplicated or otherwise reproduced in any form or by any means; or
Slide 4: LTFH 2.0
LTFH 2.0 Our Commitment TO BE A COMPANY WHICH: Sustainably delivers top quartile RoE with strengthened risk profile Has a clear Right to Win in each of the businesses Uses Data Intelligence as a key to unlock RoE Has a culture of “Results” not “Reasons” Stable and sustainable organisation built on t
Slide 5: Agenda
Agenda A Q1 in Perspective B What worked for LTFS C ESG @ LTFS D Way forward 4
Slide 6: Impact of Covid 2.0
Impact of Covid 2.0 Covid 2.0 – Comparing against the first wave Key Impact Areas Covid 1.0 Covid 2.0 Intensity / Fear of disease Relatively low High, far steeper curve Localized curbs without Nature of curbs Nationwide lockdown centralized approach Moratorium 1.0 & 2.0, OTR Regulatory support in fo
Slide 7: Conclusion from FY21 – Built sustainable business model
Conclusion from FY21 – ‘Built sustainable business model’ Through FY21, LTFS has shown the ability to deal with extremely tough conditions and has emerged strongly Proven business Strong collections strengths framework Well established Improved asset quality liability franchise and provisions Streng
Slide 8: Sustainable business model helped navigate through Covid 2.0
‘Sustainable business model’ helped navigate through Covid 2.0 Utilised Covid 1.0 learnings to address short-term challenges and minimize impact on business metrics Focus on Employee Care Strengthened Balance Sheet Shored up Liquidity • Top priority accorded to employee care • Increased liquidity in
Slide 9: Q1FY22 Performance: Key business metrics
Q1FY22 Performance: Key business metrics Disbursements Liability & Asset size NIMs + Fees Credit Cost Management 8
Slide 10: LTFH Strategy – Driven by growth engines of the industry
LTFH Strategy – Driven by growth engines of the industry Disbursements Faster pick-up in activity and collections leading to higher disbursements Farm Equipment Least impacted due to Covid 2.0; Farm cashflows remain robust Gradual pickup since unlock; Sales were impacted in May on Two Wheelers accou
Slide 11: Demonstrated growth in target portfolios
Demonstrated growth in target portfolios Disbursements & Book Disbursements Book Rs Cr YoY (%) Rs Cr YoY (%) Achieved highest ever Q1 disbursements; Farm Equipment 1,357 130% 10,682 27% Gained market share Two Wheelers 824 165% 6,894 8% Use of analytics to increase counter share with top dealers Qui
Slide 12: …leading to increased retailisation
…leading to increased retailisation Asset Mix Business wise book split (Rs Cr) Q1FY21 Q1FY22 5% 3% Particulars Q1FY21 Q1FY22 YoY% Rural 28% 27,476 29,659 8% 33% Finance 38% Housing 26,954 22,809 (15)% 40% Finance Infrastructure 39,276 33,290 (15)% 12% Finance 12% Total 15% 14% 93,706 85,758 (8)% Foc
Slide 13: Strong liability profile enabling reduction in borrowing cost
Strong liability profile enabling reduction in borrowing cost Diversified Liability Mix Weighted average cost of borrowing (WAC) 3% 2% 5% 2% Bank Loan 9% 7% 7% 7% 34% NCD Pvt 43% 8.59% 8.61% 8.54% Retail NCD 8.43% 8.49% 8.32% CP 7.82% 36% 7.65% 7.64% 45% ECB Others Q1FY21 Q1FY22 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 14: NIMs
NIMs All figures are in Rs. Cr Interest Income Interest Cost NIMs 5.01% 6.31% 3,212 2,925 1,977 1,508 1,416 1,235 Q1FY21 Q1FY22 Q1FY21 Q1FY22 Q1FY21 Q1FY22 NIM % • Higher NIMs achieved through reduction in cost of borrowing and maintaining lower average liquidity in Q1FY22 as compared to Q1FY21 • De
Slide 15: NIMs + Fee & other income
NIMs + Fee & other income NIMs + Fee & other income % of average book 7.52% 6.95% 5.78% Q1FY21 Q1FY22 FY21 • Increase in Fee income on account of higher disbursement • NIMs + Fees higher not only on YoY basis but also compared to FY21 14
Slide 16: Proactively building additional provisions to counter uncertainty
Proactively building additional provisions to counter uncertainty In FY19, LTFS started building macro-prudential provisions for any unanticipated future event risk These provisions are over and above the expected credit losses on GS3 assets and standard asset provisions Additional Provisions on bal
Slide 17: …although there is an increase in collection volumes
…although there is an increase in collection volumes through concerted efforts All figures are in Rs Cr Focused Business 13,166 9,908 4,321 Q1FY21 Q1FY22 FY21 Quarterly Avg Rural Finance Housing Finance Infrastructure Finance 6,508 4,995 4,392 1,663 1,774 3,742 2,248 1,612 461 Q1FY21 Q1FY22 FY21 Q1F
Slide 18: Credit Cost
Credit Cost Credit Cost (Rs. Cr) FY19 FY20 FY21 Q1FY22 Credit Cost on focused business 1,233 1,468 2,636 427 Credit Cost on defocused business 47 769 388* 104 Additional Provisions 325 339 369 369 Total Credit Cost 1,606 2,576 3,394 900 Credit Cost on focused business (% annualised) 1.57% 1.59% 2.79
Slide 19: LTFH Consolidated – Summary financial performance
LTFH Consolidated – Summary financial performance Performance Summary Q1FY21 Summary P&L (Rs. Cr ) Q4FY21 Q1FY22 Y-o-Y (%) 3,212 Interest Income 3,158 2,925 (9%) 1,977 Interest Expense 1,608 1,508 (24%) 1,235 NIM 1,550 1,416 15% 190 Fee & Other Income 426 270 42% 1,426 NIM + Fee & other income 1,976
Slide 20: LTFH Consolidated – Key ratios
LTFH Consolidated – Key ratios Key Ratios Q1FY21 Key Ratios Q4FY21 Q1FY22 13.03% Yield 13.05% 13.03% 5.01% Net Interest Margin 6.41% 6.31% 0.77% Fee & Other Income 1.76% 1.20% 5.78% NIM + Fee & other income 8.17% 7.52% Created additional provision of Rs 369 1.70% Operating Expenses 2.05% 2.44% Cr (1
Slide 21: LTFH Consolidated – Capital allocation and RoE bridge: Q1FY22
LTFH Consolidated – Capital allocation and RoE bridge: Q1FY22 Q1 FY21 Q1 FY22 PAT Business Segments (₹ Cr) PAT Net Worth RoE Y-o-Y (%) PAT Net worth RoE 114 4,516 9.91% Rural Finance 99 5,380 7.43% (13%) 23 4,301 2.12% Housing Finance 28 4,947 2.29% 22% 58 6,394 3.60% Infrastructure Finance 84 6,242
Slide 22: Agenda
Agenda A Q1 in Perspective B What worked for LTFS C ESG @ LTFS D Way forward 21
Slide 23: Sustainable business model
Sustainable business model Proven business strengths Strong collections framework Well established liability franchise Strengthened balance sheet 22
Slide 24: 1.1 Disbursements
1.1 Disbursements Focused Business All figures are in Rs Cr 8,105 Q1FY22 – 5,223 2,318 2,437 1,793 993 Q1FY21 Q4FY21 Apr-21 May-21 Jun-21 Rural Finance Housing Finance Infrastructure Finance 6,026 Q1FY22 – 1,480 Q1FY22 – 3,305 914 Q1FY22 – 439 1,089 1,166 1,145 1,549 317 913 1,086 206 670 132 101 22
Slide 25: 1.2.1 Focus on maintaining market share across businesses
1.2.1 Focus on maintaining market share across businesses Rural Disbursements (Rs Cr) • Highest ever Q1 disbursement despite localized lockdown; gained 1,600 1,244 1,357 market share QoQ FARM 1,400 • Continue to focus on counter share with top dealers – analytics 1,200 1,000 800 590 600 400 based re
Slide 26: 1.2.2 Steady growth in disbursements with strong pipeline
1.2.2 Steady growth in disbursements with strong pipeline Infrastructure Disbursements (Rs Cr) INFRASTRUCTURE FINANCE 1,480 1,166 • Disbursements: Continued to focus on refinancing of operational 1,089 solar projects and funding of greenfield projects • Sell Down: Improvement in sell-down and repaym
Slide 27: 1.2.3 Strong growth in AUM
1.2.3 Strong growth in AUM Mutual Fund Assets under Management (Rs Cr) Quarter ended Jun, 2020 Quarter ended Mar, 2021 Quarter ended Jun, 2021 Fund Type AUM1 Avg. AUM2 AUM1 Avg. AUM2 AUM1 Avg. AUM2 Pure Equity 25,900 23,846 30,351 30,212 32,344 30,986 Hybrid 7,379 7,053 9,972 10,204 12,332 11,505 Fi
Slide 28: 2.1 Collections
2.1 Collections Focused Business All figures are in Rs Cr 13,880 Q1FY22 – 13,166 6,801 4,321 3,811 2,553 Q1FY21 Q4FY21 Apr-21 May-21 Jun-21 Rural Finance Housing Finance Infrastructure Finance 5,835 2,649 5,395 Q1FY22 – 4,995 Q1FY22 – 1,663 4,457 Q1FY22 – 6,508 2,248 1,666 1,496 1,833 679 1,612 1,44
Slide 29: 2.2.1 Collections impacted due to state wide lockdowns
2.2.1 Collections impacted due to state wide lockdowns Retail Farm • Collections impacted in May due to restricted movement of on-field staff; recovered in June due to lifting of field restrictions • With unlocking in Rural areas and strong farm cashflows, June has seen regular CE reaching 89.0% (at
Slide 30: 2.2.2 Collections close to pre-covid levels
2.2.2 Collections close to pre-covid levels Infrastructure Industry - Avg. Daily Power Generation* (MU/day) Renewables -2% -2% 30% 14% 27% 7,000 500 • Robust performance of renewables continue to drive growth and has 402 6,000 358 316 400 helped in higher sell-down volumes and refinancing 5,000 283
Slide 31: 2.2.3 Steady improvement in collections
2.2.3 Steady improvement in collections Real Estate LTFS Real Estate portfolio sales • Focus on Cat A developers, construction activity, Govt. measures % of FY20 quarterly avg and attractive schemes given by developers, has helped our funded 100% projects sales to be less impacted than the industry
Slide 32: 3.1 Strong liability franchise
3.1 Strong liability franchise Incremental Long Term Borrowing (Rs Cr) Products NCD – Pvt. Term Loans - Term Loans – ECBs Total Period Placement PSL Non PSL Q1FY21 2,500 50 1,000 - 3,550 Q2FY21 4,232 50 - 378 4,660 Q3FY21 2,780 1,100 - 368 4,248 Q4FY21 825 2,325 20 - 3,170 Q1FY22 1,500 650 - - 2,150
Slide 33: 3.2 AAA Credit Rating for LTFH and all its subsidiaries
3.2 AAA Credit Rating for LTFH and all its subsidiaries Credit Ratings – LTFH and its subsidiaries • April 2021: Subsequent to the merger of L&T Infrastructure Finance Company Ltd and L&T Housing Finance Ltd into L&T Finance Ltd (L&T Finance) becoming effective, all the Rating agencies have reviewed
Slide 34: 3.3 Prudent ALM
3.3 Prudent ALM As on 30th June, 2021 Structural Liquidity statement Cumulative Inflows (Rs. Cr) Cumulative Outflows (Rs. Cr) 59,368 38,063 28,636 30,808 25,105 20,860 14,757 16,363 16,809 7,176 9,365 1,751 2,188 4,143 1-7 days 8-14 days 15 days-1 1-2 months 2-3 months 3-6 months 6-12 months month C
Slide 35: 4.1 Strengthened balance sheet
4.1 Strengthened balance sheet Capital Adequacy D/E Ratio 24.56% 21.18% 6.33 5.14% 3.95% 4.44 19.42% 17.23% Q1FY21 Q1FY22 Q1FY21 Q1FY22 Tier I Tier II CRAR Strengthened Capital adequacy; Tier I ratio increased to Reduced D/E ratio from 6.33 in Q1FY21 to 4.44 in 19.42% in Q1FY22 Q1FY22. Well position
Slide 36: 4.2 Asset quality
4.2 Asset quality LTFH Consolidated – Asset Quality 69% 69% 65% 4,939 4,881 5,000 4,504 7% 4,000 5.75% 5.24% 4.97% 3,000 4% 2,000 1,553 1,691 1,377 1,000 1.71% 1.57% 2.07% 0 1% Q1FY21 Q4FY21 Q1FY22 GS3 (Rs Cr) NS3 (Rs Cr) GS3 (%) NS3 (%) PCR (%) In absolute amounts, GS3 has reduced from Rs 4,939 Cr
Slide 37: Agenda
Agenda A Q1 in Perspective B What worked for LTFS C ESG @ LTFS D Way forward 36
Slide 38: Growing Together - People, Business & Community
‘Growing Together - People, Business & Community’ Sustainability Report Assured by Ernst & Young Associates GRI Standards (2016) – core option Six capitals as per IIRC Framework LLP 37
Slide 39: LTFH ESG Journey: A Sustained Commitment
LTFH ESG Journey: A Sustained Commitment 2018 2019 2020 2021 May May Apr Apr Gap Assessment- 1st Sustainability Report ESG Targets adopted Setting up of Board level Sustainability readiness ESG Committee Jul Jun Sep S&P Global Corporate Certified for FTSE4Good Sustainability task force Sustainabilit
Slide 40: Building a Sustainable Collective Future
Building a Sustainable Collective Future Environment: Committed to Financing India’s Energy Transformation, both at the Business as well as Entity level • Financed 1,560 MW of green energy in FY 2020-21 through Renewable Finance business • 49 Lakh+ tonnes of Co2e GHG emissions avoided in financed po
Slide 41: ESG Ratings / Score
ESG Ratings / Score Disclaimer statement for usage of Sustainalytics and MSCI logo • COPYRIGHT ©2021 SUSTAINALYTICS. ALL RIGHTS RESERVED. THIS [PUBLICATION/ ARTICLE/ SECTION] CONTAINS INFORMATION DEVELOPED BY SUSTAINALYTICS (WWW.SUSTAINALYTICS.COM). SUCH INFORMATION AND DATA ARE PROPRIETARY OF SUSTA
Slide 42: Agenda
Agenda A Q1 in Perspective B What worked for LTFS C ESG @ LTFS D Way forward 41
Slide 43: Way Forward – Continue to focus on Strategic Goals
Way Forward – Continue to focus on Strategic Goals Short Term Goals Protecting Balance Sheet Conserving Business Franchise • Build adequate provisions to counter uncertainty Maintain connect with dealers and • Maintain adequate liquidity for customers to ensure continuity of any short-term event bus
Slide 44: Appendix
Appendix Z) L&T Financial Services
Slide 45: Update on OTR and Merger
| Update on OTR and Merger aA ® L&T Financial Services
Slide 46: Update on OTR and Merger
Update on OTR and Merger One time restructuring (OTR) under resolution framework for Covid-19 related stress by RBI Particulars OTR 1.0 OTR 2.0 Restructured under OTR (amount, Rs Cr) 1,350 983 Restructured under OTR (% of loan book) 1.5% 1.1% Provision on restructured assets (amount, Rs Cr) 152 172
Slide 47: Financial Update
| Financial Update ® L&T Financial Services 46
Slide 48: Lending Business – Business wise disbursement split
Lending Business – Business wise disbursement split Disbursement Q1FY21 Segments (Rs. Cr ) Q4FY21 Q1FY22 Y-o-Y (%) 590 Farm Equipment 1,244 1,357 130% 310 TW Finance 1,372 824 165% 7 Micro Loans 3,181 797 * 6 Consumer Loans 229 327 * 913 Rural Finance 6,026 3,305 262% 66 Home Loans 582 288 335% 2 LA
Slide 49: Lending Business – Business wise book split
Lending Business – Business wise book split Book Q1FY21 Segments (Rs. Cr) Q4FY21 Q1FY22 Y-o-Y (%) 8,403 Farm Equipment 10,261 10,682 27% 6,386 TW Finance 7,122 6,894 8% 12,531 Micro Loans 12,207 11,303 (10%) 155 Consumer Loans 490 780 402% 27,476 Rural Finance 30,080 29,659 8% 7,830 Home Loans 7,333
Slide 50: Rural Finance – Summary financial performance
Rural Finance – Summary financial performance Performance Summary Q1FY21 Summary P&L (Rs. Cr ) Q4FY21 Q1FY22 Y-o-Y (%) 1,307 Interest Income 1,375 1,390 6% 509 Interest Expense 446 436 (14%) 798 NIM 929 953 19% 32 Fee & Other Income 163 76 142% 829 NIM + Fee & other income 1,093 1,030 24% 262 Operat
Slide 51: Rural Finance – Key ratios
Rural Finance – Key ratios Key Ratios Q1FY21 Key Ratios Q4FY21 Q1FY22 18.83% Yield 18.76% 18.55% 11.53% Net Interest Margin 12.86% 12.72% 0.46% Fee & Other Income 2.26% 1.02% 11.98% NIM + Fee & other income 15.11% 13.74% 3.78% Operating Expenses 4.81% 4.82% 8.20% Earnings before credit cost 10.30% 8
Slide 52: Rural Finance - Asset quality
Rural Finance - Asset quality Rural - Asset Quality 93% 80% 75% 14% 12% 10% 1,273 1,164 8% 921 6% 3.96% 4.40% 4% 3.43% 317 235 2% 67 1.13% 0.82% 0.26% 0% Q1FY21 Q4FY21 Q1FY22 GS3 (Rs. Cr) NS3 (Rs. Cr) GS3 (%) NS3 (%) PCR (%) Carrying additional provisions of Rs. 1,045 Cr (3.78% of standard book) to
Slide 53: Housing Finance – Summary financial performance
Housing Finance – Summary financial performance Performance Summary Q1FY21 Summary P&L (Rs. Cr ) Q4FY21 Q1FY22 Y-o-Y (%) 825 Interest Income 711 673 (18%) 558 Interest Expense 426 424 (24%) 267 NIM 285 249 (7%) 36 Fee & Other Income 42 26 (26%) 302 NIM + Fee & other income 327 275 (9%) 80 Operating
Slide 54: Housing Finance – Key ratios
Housing Finance – Key ratios Key Ratios Q1FY21 Key Ratios Q4FY21 Q1FY22 12.32% Yield 11.38% 11.65% 3.99% Net Interest Margin 4.57% 4.30% 0.53% Fee & Other Income 0.67% 0.46% 4.52% NIM + Fee & other income 5.23% 4.76% 1.19% Operating Expenses 1.15% 1.74% 3.33% Earnings before credit cost 4.08% 3.01%
Slide 55: Housing Finance - Asset quality
Housing Finance - Asset quality Housing - Asset Quality 33% 32% 32% 9% 6% 343 315 3% 259 234 214 174 1.46% 1.40% 0.97% 1.00% 0.96% 0.65% 0% Q1FY21 Q4FY21 Q1FY22 GS3 (Rs. Cr) NS3 (Rs. Cr) GS3 (%) NS3 (%) PCR (%) Carrying additional provisions of Rs. 358 Cr (1.61% of standard book) to prepare for impa
Slide 56: Infrastructure Finance – Summary financial performance
Infrastructure Finance – Summary financial performance Performance Summary Q1FY21 Summary P&L (Rs. Cr ) Q4FY21 Q1FY22 Y-o-Y (%) 965 Interest Income 999 805 (17%) 773 Interest Expense 673 589 (24%) 192 NIM 325 216 12% 44 Fee & Other Income 119 68 55% 236 NIM + Fee & other income 444 284 20% 49 Operat
Slide 57: Infrastructure Finance – Key ratios
Infrastructure Finance – Key ratios Key Ratios Q1FY21 Key Ratios Q4FY21 Q1FY22 9.91% Yield 10.13% 9.47% 1.98% Net Interest Margin 3.30% 2.55% 0.45% Fee & Other Income 1.20% 0.80% 2.42% NIM + Fee & other income 4.50% 3.34% 0.50% Operating Expenses 0.36% 0.52% 1.92% Earnings before credit cost 4.14% 2
Slide 58: Infrastructure Finance - Asset quality
Infrastructure Finance - Asset quality Infrastructure Finance- Asset Quality 63% 73% 65% 12% 2,564 2,524 2,238 10% 7.94% 8% 6.87% 6.21% 6% 956 876 4% 610 2% 2.68% 2.91% 1.77% 0% Q1FY21 Q4FY21 Q1FY22 GS3 (Rs. Cr) NS3 (Rs. Cr) GS3 (%) NS3 (%) PCR (%) 57 GS3 - Gross Stage 3; NS3 - Net Stage 3; PCR – Pr
Slide 59: Infrastructure Finance – Portfolio wise split
Infrastructure Finance – Portfolio wise split D I Sectors (Rs. Cr) Q1FY21 Q4FY21 Q1FY22 Y-o-Y (%) S Renewable Power 994 493 1,264 27% B U Roads 64 563 160 150% R S Power Transmission 10 36 32 218% E M Others1 22 74 24 12% E N T Total 1,089 1,166 1,480 36% Q1FY21 Q4FY21 Q1FY22 Sectors (Rs. Cr) Q1FY21
Slide 60: Product profile and Geographies
Product profile and Geographies ATS ATS Avg Tenor BUSINESS Major Geographies on o/s book on qtrly disb on disb Farm MP, Telangana, UP, Karnataka, Bihar, AP, Rs 3.0 Lakhs Rs 4.0 Lakhs 44 months Equipment Maharashtra Two WB, Maharashtra, Gujarat, Assam, TN, Rs 39k Rs 72k 26 months Karnataka, Delhi Whe
Slide 61: LTFH branch footprint
LTFH branch footprint 8 2 As of 30th June, 2021 10 1 No. of States & Union 21 & 1 8 Territories 14 4 9 No. of branches 196 3 No. of Micro Loans meeting 16 27 13 1 1,437 centers* 6 7 No. of employees 23,070 24 10 1 11 12 6 3 60 *All these are in rural areas
Slide 62: Corporate Social Responsibility
Corporate Social Responsibility Directly linked to creating value FOCUS: GENERATION OF SUSTAINABLE RURAL LIVELIHOODS Digital Financial Inclusion Other Projects • Reached and trained 2,16,000+ community members to train on Digital Disaster Management Financial Literacy • Provided immediate relief to
Slide 63: Awards & Recognition
Awards & Recognition The Asset Triple A Asia Infrastructure Awards 2020 Renewable Energy Acquisition DX- CEO IDC Digital Transformation Financing Deal of the Year Awards- India & Utility Deal of the Year (October, 2020) (July, 2020) Business Standard Social Excellence Award 2019 Corporate Social Res
Slide 64: Board comprises majority of Independent Directors
Board comprises majority of Independent Directors Board of Directors S. V. Haribhakti, Non-Executive Chairman, Independent Director Dinanath Dubhashi, Managing Director & CEO o Chairman of Future Lifestyle Fashions Limited, Blue Star Limited & o 31 years of experience across multiple domains in BFSI
Slide 65: Management Team
Management Team Dinanath Dubhashi Managing Director & CEO 31 yrs exp, BNP Paribas, SBI Cap, CARE Kailash Kulkarni Sunil Prabhune Raju Dodti Shiva Rajaraman CE - Investment Management CE – Rural & Housing Finance CE – Wholesale Finance CE – L&T Infra Debt Fund Group Head - Marketing Group Head – Digi
Slide 66: Deliver sustainable RoE
Deliver sustainable RoE Registered Office: L&T Finance Holdings Limited Brindavan, Plot No 177 CST Road, Kalina Santacruz (E), Mumbai 400 098 www.ltfs.com T +91 22 6212 5000/5555 CIN: L67120MH2008PLC181833 65