Satin Creditcare Network Ltd · NSE:SATIN
Satin Creditcare Network — Q1 FY2018 Earnings Presentation
56 slides from Satin Creditcare Network's earnings presentation, Aug 21, 2017
Slide 1: Satin Creditcare Network Ltd. exchange filing letter
Fon ATIN CREDITCARE NETWORK LTD. lo Reaching out! August 21, 2017 To, The Manager, The Manager The Manager, National Stock Exchange of India Ltd. BSE Limited The Calcutta Stock Exchange Ltd Exchange Plaza, C-1, Block G, Phiroze Jeejeebhoy 7, Lyons Range Bandra Kurla Complex, Towers, : Kolkata 700001
Slide 2: Satin Creditcare Network Limited Q1FY18 Corporate Presentation
SATIN CREDITCARE NETWORK LIMITED Q1FY18 CORPORATE PRESENTATION AUGUST 2017 BSE: 539404 | NSE: SATIN | CSE: 30024 Corporate Identity No. L65991DL1990PLC041796
Slide 3: 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 4: Contents
Contents Details Satin Overview 3 Key Investment Thesis 7 Future Business Strategy 30 Conclusion 33 Annexure Industry Overview – BC Operations, MSME Finance and Small Ticket Housing Finance 35 Financial & Operational Details – Consolidated 39 Financial & Operational Details – Standalone 43 Financial
Slide 5: Satin Overview
Satin Overview
Slide 6: Company Overview
Company Overview Business Overview Marquee Shareholder Base India’s third largest NBFC-MFI in terms of Gross Loan Portfolio (“GLP” or “Gross AUM”)(1) As on August 10, 2017 Listed on CSE (May’15), NSE (Aug’15) and BSE (Oct’15) Others Promoter & 21.35% Led by Mr HP Singh, who has experience of o
Slide 7: Key Milestones
Key Milestones 20 years to reach AuM of Rs 100 Cr; next 7 years to reach AuM of Rs 4,000 Cr Business Timeline Reaches 0.49 mn active clients JLG business shows Receives MIX & gross AUM of ~Rs. 5,800 mn Listing on NSE, Reaches 2.65 mn active Date of inception Registers as NBFC (as on Mar’13); Convert
Slide 8: Select Accolades & Key Highlights
Select Accolades & Key Highlights Winner of “Best NBFC-MFI Award” in 2017 & Runner- Award by Client Protection Certificate up for “CSR Initiatives & Business Responsibility MF Transparency Organization Smart Campaign - 2016 Award” in NBFC-MFI category– CIMSME Banking and NBFC Awards 2016 “Client
Slide 9: Key Investment Thesis
Key Investment Thesis
Slide 10: Key Investment Thesis
Key Investment Thesis 9 1 Robust industry Experienced fundamentals management with strong team regulatory 8 support 2 Excellent Backed by Large, Management Marquee Institutional of Demonetization Investors Strong operational capabilities backed Derisking the Business by robust IT – By Geography & 7
Slide 11: Microfinance – Supportive Industry Dynamics and Robust Fundamentals
Microfinance – Supportive Industry Dynamics and Robust 1 Fundamentals; Strong 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 (wit
Slide 12: Low Penetration of MFI in India
Low Penetration of MFI in India Northern and western states are relatively under penetrated Top 10 states having 87% market share in FY17 State-wise MFI penetration data(1) Market Share (%) Gujarat Others Tamil Nadu 4% 13% 19% 0% Kerala 6% 0% Odisha Karnataka 6% 13% 15% 18% West Bengal 16% 6% Mahara
Slide 13: Industry Landscape Changing with Consolidation around Top Players
Industry Landscape Changing with Consolidation around Top Players and MFIs converting into SFBs Top 10 players account for 68% of FY17 industry GLP Industry landscape transforming with MFIs converting into SFBs Share of top 10 players MFIs-turned-SFBs account for 42% of industry(1) Equitas GK Satin
Slide 14: Impact of Demonetisation
Impact of Demonetisation Uttar Pradesh and Maharashtra were among the worst affected states with elections further impacting the industry State wise level of PAR>30 as of FY17(1) Impact of demonetization on asset quality (PAR>30)(1) 37.0% 37% 28.7% 28.0% 28% 22% 17.0% 14.2% 18% 17% 16% 16% 14% 14% 9
Slide 15: MFI industry has shown resilience over the past decade
However, MFI industry has shown resilience over the past decade National Farm AP Ordinance AP Farm Loan Demonetization Loan Waiver Waiver 97% 85% 67% 68% 56% 72% 22% 10% 37% 13% (42%) 684 563 335 183 208 181 35 117 120 133 60 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 GLP GLP Growth Sour
Slide 16: Excellent Management of Demonetization
2 Excellent Management of Demonetization Consistent Increase in Collections Post Demonetization … … With a Return to Normal Disbursement Levels Collections trend % - All States Avg. Monthly Disbursements (Rs. mn) 96% 92% 91% 3,832 3,728 89% 3,555 87% 87% 86% 84% 76% 65% 72% 969 58% 58% 58% 66% 61% N
Slide 17: Proactive Efforts to Minimize Demonetisation Impact
Proactive Efforts to Minimize Demonetisation Impact leading to Strong Recovery in Collection Efficiency Steps taken to minimize demonetization impact Strong Recovery in Collection Efficiency Disbursement of Emergency Loans: ~Rs 100 Cr disbursed via Monthwise Collection Efficiency(1) “Emergency loa
Slide 18: Collection efficiency for loans disbursed post demonetisation
Collection efficiency for loans disbursed post demonetisation healthy with steady improvement in PAR levels Collection rate for newly disbursed loans is close to normalcy Collection Efficiency (%) from 1st Jan to 31st Jul 2017 - Post Demonetization 100.0% 99.1% 99.3% 99.1% 99.2% 99.9% 99.4% 100.0% 9
Slide 19: Derisking the Business – By Product
3 Derisking the Business – By Product Existing Product New Products with Large Target Markets Affordable Strategic Tie- MFI MSME BC Services Housing Up with Large NBFC Started in FY09 Started in FY17 Acquired in FY17 Proposed start : FY18 Proposed start : FY18 • Total GLP under MFI • Launched in in
Slide 20: Typical Products Offered to MFI Borrowers
Typical Products Offered to MFI Borrowers MFI Segment(1) Non-MFI Segment Business Correspondent services Product features as on Jun’17 MFI Lending Loans to MSME(2) TSL(3) Start Date May’08 (JLG) Apr‘16 May’12(3) Rs. 15,000 – Rs. 35,000 Ticket Size Range Rs. 5,000 – Rs. 50,000 Rs. 100,000 – Rs. 1,500
Slide 21: Derisking the Business – By Geography
Derisking the Business – By Geography Reducing Concentration at the States1… Areas of operations – Reducing Geographic concentration GLP - FY14 – Q1FY18 FY14 States Q1FY18 Change Q1FY18 GLP 10,561 21,407 32,708 36,168 37,706 % mix % mix (Rs. mn) CAGR % (Rs.mn) Uttar Pradesh 13,659 36% 52% 33% 15.5%
Slide 22: 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 Q1FY18 Population4 YoY growth7,8 Satin YoY7 Q1FY18 • With presence in 18 states1, Satin is steadily building a pan Region Cl
Slide 23: 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 24: Improving Liability Profile and Strong Liquidity Position
5 Improving Liability Profile and Strong Liquidity Position Significant reduction in dependence on banks Benefit of positive ALM mismatch continues Funding Mix (%) ALM (No. of Months)1 21.3% 13.0% 30.8% 36.1% 39.7% 5.4% 27.0% 4.5% 2.7% 1.4% 10.9% 10.5% 8.8% 7.6% 24.9% 18.2% 12.9% 13.6% 21.5 20.8 17.
Slide 25: Operational Highlights (1/2)
6 Operational Highlights (1/2) Districts, States and Branches Employees & Loan Officers Disbursements (Rs. Mn) & No. of Loans3 (Lacs) 7941 4,7742 7671 15.66 4,4812 431 2,684 16.89 267 1,710 199 17 1,347 16 16 7,265 10.56 18 41,286 3.7x 6,910 6.23 11 10 3.83 12 244 5,8013 6,0323 36,061 35,9403 13,021
Slide 26: Operational Highlights (2/2)
Operational Highlights (2/2) Disbursement Per Branch (Rs. Mn) Disbursement Per Employee (Rs. Mn) GLP/Branch – MFI Lending (Rs. Mn) 9.5 80.2 88.6 9.2 75.6 83.3 58.3 58.7 61.8 6.3 6.2 53.1 54.6 52.0 57.8 33.8 25.5 17.9* 1.9* FY14 FY15 FY16 FY17 Q1FY18 FY14 FY15 FY16 FY17 Q1FY18 FY14 FY15 FY16 FY17 Q1F
Slide 27: Robust Financial Performance
Robust Financial Performance Net Worth(1) (Rs. Mn) CRAR (Tier1 + Tier2) Tier - I Tier - II 24.14% 21.68% 16.82% 15.67% 15.31% 7.56% 6.22% 0.99% 6,786 5.52% 6,622 6.07% 14.32% 16.58% 15.45% 3,240 11.30% 1,995 9.60% 1,444 FY14 FY15 FY16 FY17 Q1FY18 FY14 FY15 FY16 FY17 Q1FY18 NII(2) and PAT (Rs. mn) Op
Slide 28: Operational Capabilities Backed by Robust IT Infrastructure
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 NEW SYTSTEM Completed • Real Time reporting from the field Migrated to a training for all centralized • A major step
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 Previous System KYC and Bank Loan Processing at Confirmation by Disbursement by Client Information RO BM HO Team CSO collects clients E
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. 2.5 bn via QIP to marquee institutions Adequate board representation – There are 3 directors on the board repr
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 27 years 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) Rs. 684 bn market; expected to grow at 26% CAGR over next 4 years Focus on improving collections and GLP growth momentum GLP (INR bn) Geographic diversification – Broad base operations and reduce any geographic 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 financial products across the 16,717 13,140 13,955 7,805 branch network of Satin 11,345 11,733 6,786 Focus on non-
Slide 35: Conclusion
Conclusion
Slide 36: Focus to Build the Business for Future Despite Demonetization
Focus to Build the Business for Future Despite Demonetization While the industry was grappling with collections and significant portion of our AUM was in affected geographies, our efforts persisted on several other fronts Focus on Product Portfolio Technology revamp leading to operational Started
Slide 37: Annexure: Industry Overview
Annexure Industry Overview -BC Operations, MSME Finance and Small Ticket Housing Finance
Slide 38: 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 39: 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 40: 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 41: Annexure: Financial & Operational Details - Consolidated
Annexure Financial & Operational Details - Consolidated
Slide 42: Operational Details – Consolidated
Operational Details – Consolidated CAGR% YoY% PARTICULARS FY15 FY16 FY17(A) Q1FY18(A) (FY15-FY17) (FY16-FY17) Gross AUM (Rs. mn) 37.8% 21,407 32,708 40,667 24.3% 42,203 On-Book AUM (Rs. mn) 47.8% 14,645 22,747 31,992 40.6% 35,292 Securitization/ Assignment (Rs. mn) (21.4%) 6,762 9,960 4,177 (58.1%)
Slide 43: Balance Sheet – Consolidated
Balance Sheet – Consolidated PARTICULARS (Rs. mn) CAGR% (FY15-FY17) FY15 FY16 FY17(A) YoY% (FY16-FY17) Q1FY18(A) Equity(1) 81.5% 1,935 3,240 6,376 96.8% 6,523 Preference shares 60 - 250 250 Net Worth 82.3% 1,995 3,240 6,626 104.5% 6,773 Minority Interest - - 23 21 Long Term Borrowings 57.9% 8,117 13
Slide 44: P&L Statement – Consolidated
P&L Statement – Consolidated CAGR% YoY % PARTICULARS (Rs. mn) FY15 FY16 FY17(A) Q1FY18(A) (FY15-FY17) (FY16-FY17) Total Revenue Interest Income 52.1% 2,662 4,275 6,158 44.0% 1,879 Excess Interest Spread on securitization 79.6% 330 892 1,064 19.3% 74 Loan Processing Fee 26.1% 225 352 358 1.7% 116 Inc
Slide 45: Annexure: Financial & Operational Details - Standalone
Annexure Financial & Operational Details - Standalone
Slide 46: Robust Operational Performance Over the Years
Robust Operational Performance Over the Years (1) CAGR% YoY % PARTICULARS FY15 FY16 FY17 Q1FY18 (FY15-FY17) (FY16-FY17) Gross AUM (Rs. mn) 30.0% 21,407 32,708 36,168 10.6% 37,706 No. of districts 39.4% 121 215 235 9.3% 244 No. of branches 52.1% 267 431 618 43.4% 634 No. of States of operation 20.6%
Slide 47: Robust Operational Performance Over the Years (Contd.)
Robust Operational Performance Over the Years (1) (Contd.) PARTICULARS FY15 FY16 FY17 YoY% Q1FY18 Product Financing Gross AUM (Rs. mn) - 113 1.22 (98.9%) 0.03 No. of Loan Accounts - 190,044 7,495 (96.1%) 182 Disbursement during the period (Rs. mn) - 140 22.59 (83.9%) - No. of loans disbursed during
Slide 48: Financial Performance – Standalone
Financial Performance – Standalone RoE Tree FY15 FY16 FY17 Gross Yield (1) 20.28% 20.64% 22.55% Financial Cost Ratio(2) 11.10% 10.71% 12.64% Net Interest Margin(3) 9.18% 9.93% 9.91% Operating Expense ratio(4) 5.65% 5.91% 7.17% Loan Loss Ratio(5) 0.61% 0.77% 1.63% RoA(6) 2.03% 2.18% 0.61% Leverage (T
Slide 49: Balance Sheet – Standalone
Balance Sheet – Standalone PARTICULARS (Rs. mn) CAGR (FY15-FY17) FY15 FY16 FY17 YoY % (FY16-FY17) Q1FY18 Equity(1) 81.5% 1,935 3,240 6,372 96.7% 6,536 Preference shares 104.1% 60 - 250 250 Net Worth 82.2% 1,995 3,240 6,622 104.4% 6,786 Long Term Borrowings 57.8% 8,117 13,335 20,201 51.5% 19,180 Long
Slide 50: P&L Statement – Standalone
P&L Statement – Standalone CAGR% YoY % PARTICULARS (Rs. mn) FY15 FY16 FY17 Q1FY18 (FY15-FY17) (FY16-FY17) Total Revenue Interest Income 52.0% 2,662 4,275 6,150 43.8% 1,875 Excess Interest Spread on securitization 79.6% 330 892 1,064 19.2% 74 Loan Processing Fee 26.1% 225 352 358 1.7% 116 Other Opera
Slide 51: Annexure: Financial & Operational Details - TSL
Annexure Financial & Operational Details - TSL
Slide 52: Operational Details – TSL
Operational Details – TSL CAGR% YoY % PARTICULARS FY15 FY16 FY17 Q1FY18 (FY15-FY17) (FY16-FY17) Gross AUM (Rs. mn) 31.5% 2,603 3,458 4,498 30.1% 4,497 No. of districts 55.5% 36 61 87 42.6% 84 No. of branches 46.9% 69 112 149 33.0% 160 No. of States of operation 41.4% 4 6 8 33.3% 8 No. of Employees 5
Slide 53: Financial Details – TSL
Financial Details– TSL CAGR% YoY % PARTICULARS (Rs. Mn) FY15 FY16 FY17 Q1 FY18 (FY15-FY17) (FY16-FY17) Balance Sheet Networth (Rs. Mn) 23.8% 122 177 187 5.8% 171 Total borrowings (Rs. Mn) 178.2% 11 23 88 279.0% 46 Other Liabilities & Provisions 17.6% 126 180 174 (3.1%) 232 Total Liabilities 31.6% 25
Slide 54: Collections With Lag – TSL
Collections With Lag – TSL Collection with Lag Nov'16 Dues Dec'16 Dues Jan'17 Dues Feb'17 Dues Mar'17 Dues Apr'17 Dues May'17 Dues Jun'17 Dues As on 30-Nov 96% - - - - - - - 31-Dec 97% 88% - - - - - - 31-Jan 98% 91% 85% - - - - - 28-Feb 98% 92% 89% 84% - - - - 31-Mar 98% 93% 90% 87% 83% - - - 30-Apr
Slide 55: Contact Information
Contact Information For any queries, please contact: Mansi Verma AVP – Capital Markets Satin Creditcare Network Limited E: mansi.verma@satincreditcare.com T: +91 11 4754 5000 (Ext – 243) 53
Slide 56: Thank You
Thank You
Satin Creditcare Network — Q1 FY2018 Earnings Presentation on 6ix