Indostar Capital Finance Limited · NSE:INDOSTAR
Indostar Capital Finance — Q4 FY20 Earnings Presentation
51 slides from Indostar Capital Finance's earnings presentation, Jun 17, 2020
Slide 1: Q4 & FY20 Results Update
INDOSTAR CAPITAL FINANCE LIMITED Q4 & FY20 Results Update 17 June 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 ❖ Quarterly & Annual Results ❖ Covid Update ❖ Business Update ❖ Shareholding Structure
Slide 4: Equity raise of INR 12,250mn completed
Equity raise of INR 12,250mn completed Strong Endorsement of IndoStar’s Business Model, Management Capability and Quality of Retail Lending Franchise • Brookfield has invested growth capital of ₹ 12,250 mn via equity shares and CCPS • First Private Equity deal by Brookfield in the Indian Financial S
Slide 5: Strong Capital and Liquidity position
Strong Capital and Liquidity position Brookfield investment expected to act as a catalyst for additional liquidity from banks • IndoStar will have amongst the highest capital adequacy ratio within all the listed NBFCs • Pre equity infusion CAR of ~ 25% goes up to ~ 41% post equity infusion. Also, pr
Slide 6: Significant Growth Capital: A real edge in current environment
Significant Growth Capital : A real edge in current environment IndoStar now has all the essential ingredients to rapidly grow its loan book in the future • Capital : We now have substantial growth capital, which we will utilize to pursue calibrated growth • Infrastructure : Our current infrastructu
Slide 7: Discussion Summary
Discussion Summary ❖ Brookfield investment in IndoStar Capital ❖ Quarterly & Annual Results ❖ Covid Update ❖ Business Update ❖ Shareholding Structure
Slide 8: Q4 & FY20 performance: Key Highlights
Q4 & FY20 performance : Key Highlights ▪ Strong retail franchise ~ 71% of AUM (61% in Mar-19) ▪ Execution of ICICI partnership gaining momentum Execution of Retailisation Theme ▪ AUM of ~ ₹ 7,500 mn ▪ Monthly run rate of ~ ₹ 1,250 mn ▪ Comfortable liquidity - cash and equivalents ₹ 20,135 mn ▪ Full
Slide 9: Provisioning - Ringfencing the portfolio
Provisioning - Ringfencing the portfolio ₹ crores Corporate CV Housing CV IIFL SME Total Lending Organic Finance ECL 47 39 (48) * 5 5 47 Write offs 127 7 110 26 - 270 ECL + Write Offs 174 46 62 31 5 317 Accelerated Write Offs 207 30 30 - - 267 Total ECL + Write Offs 381 76 92 31 5 584 Covid Provisio
Slide 10: Q4 & FY20: Consolidated Profit & Loss Statement
Q4 & FY20: Consolidated Profit & Loss Statement Particulars (₹ mn) Q4FY20 Q3 FY20 QoQ % Q4FY19 YOY % FY20 FY19 YoY % Revenue from Operations 3,206 3,658 -12% 3,411 -6% 15,293 12,210 25% Interest Expenses (1,814) (1,801) 1% (1,639) 11% (7,911) (5,636) 40% Net Revenue from Operations 1,391 1,856 -25%
Slide 11: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (₹ mn) Mar-20 Dec-19 QoQ % Mar-19 YoY % Equity 26,806 30,953 -13% 30,063 -11% Borrowings 66,798 63,541 5% 89,357 -25% Other Liabilities 706 Total Liabilities 93,603 94,494 -1% 120,126 -22% Loan Assets 78,019 84,352 -8% 102,222 -24% Treasury Assets 7,756 5,591 3
Slide 12: Q4FY20: Business Segment Performance
Q4FY20: Business Segment Performance Corporate SME Housing Particulars (₹ mn) CV Finance Consolidated ^ ^ Lending Finance Finance Revenue from Operations 1,077 1,327 428 261 3,206 Interest Expenses (610) (630) (266) (141) (1,814) Net Interest Income 467 697 162 119 1,391 People Costs 27 193 44 63 50
Slide 13: FY20: Business Segment Performance
FY20: Business Segment Performance Corporate SME Housing Particulars (₹ Mn) CV Finance Consolidated ^ Lending Finance Finance Revenue from Operations 5,534 6,099 2,136 984 15,293 Interest Expenses (2,930) (2,560) (1,181) (498) (7,911) Net Interest Income 2,604 3,539 955 486 7,382 People Costs 158 87
Slide 14: Diversified Funding Profile
Diversified Funding Profile Funding Mix - Dec 2019 Funding Mix - Mar 2020 Others Securitisat 1% Others Equity ion 6% Equity 33% 11% 29% NCD NCD Banks Banks 22% 37% 24% 37% Incremental Funding mobilized Strong Credit Ratings ₹ mn Q1FY20 Q2FY20 Q3FY20 Q4FY20 Total Borrowing Type Rating Firm Ratings Ba
Slide 15: Strong Liquidity Position
Strong Liquidity Position Particulars (₹ mn) Jun-20 Q2FY21 Q3FY21 Q4FY21 Opening Cash & Equivalents* 20,135 16,760 13,984 14,720 Loan repayment inflows [Principal] 163 1,000 4,426 5,310 Total Inflow 20,298 17,760 18,410 20,030 Liability Repayment [Principal] NCDs 250 - 250 3,576 Term Loans & Others
Slide 16: 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 322 322 322 233 233 9 2 159 4 305 305 305 11 222 222 22 55 55 55 49 48 21 10 10 10 10 10 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 SME Finance Housing Fin
Slide 17: Quarterly Performance Trend (1/2)
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 20,280 107,181 102,219 15,130 14,224 96,899 16,591 17,867 18,880 8,675 12,357 8,759 102,222 101,568 7,570 6,612 7,324 90,590 84,352 78,019 11
Slide 18: Quarterly Performance Trend (2/2)
Quarterly Performance Trend (2/2) NPA * PAT (₹ mn) GNPA NNPA 739 471 494 4.7% 4.4% 4.5% 2 3.7% Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 2.6% 3.7% 3.5% 3.6% 3.0% 1.7% -4,214 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 * GNPA & NNPA represents Stage 3 Assets Net worth (₹ mn) Return Ratios^ & Capital Adequacy (%) 30,
Slide 19: Asset Quality: Continuing reduction in Retail NPAs
Asset Quality : Continuing reduction in Retail NPAs Gross NPA (₹ mn) Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Corporate Lending - 1,546 1,546 1,546 1,546 CV Finance 2,226 2,651 1,411 1,946 1,805 SME Finance 545 677 437 267 237 Housing Finance 7 19 26 51 63 Total 2,778 4,893 3,420 3,811 3,652 Net NPA (₹ mn
Slide 20: Discussion Summary
Discussion Summary ❖ Brookfield investment in IndoStar Capital ❖ Quarterly & Annual Results ❖ Covid Update ❖ Business Update ❖ Shareholding Structure
Slide 21: Priorities during lockdown
Priorities during lockdown : Employee Safety, Liquidity , Moratorium, Soft Collections • All branches closed to ensure employee and customer safety ➢ 190 branches open as on date • Active discussions with bankers/institutions to raise liquidity ➢ Total borrowings of INR 452 crores (including INR 100
Slide 22: 2/3rd of portfolio AUM in most affected states
2/3rd of portfolio AUM in most affected states State CL CV SME AHF Total Maharashtra 76% 11% 29% 23% 36% Gujarat 3% 7% 16% 6% 7% Delhi 6% 19% 6% 35% 14% Tamilnadu 1% 8% 9% 9% 6% Madhya 0% 7% 3% 0% 3% Pradesh Total 86% 52% 63% 73% 66% 21
Slide 23: Close to 90% customers in value opted for moratorium 1.0
Close to 90% customers in value opted for moratorium 1.0 % customers % customers % Collections in opting for opting for April-May from moratorium moratorium non-moratorium (Nos) (Value) * customers Corporate 84% 90% 100% Lending CV 75% 88% 100% SME 92% 92% 100% AHF 87% 85% 100% * 89% on overall valu
Slide 24: Portfolio quality improvement with focus on overdue collections
Portfolio quality improvement with focus on overdue collections during lockdown Days Past Due CV SME AHF Mar May Mar May Mar May All in % * 2020 2020 2020 2020 2020 2020 Current 56 61 85 87 98.1 98.3 0-30 16 14 7 6 0.7 0.5 31-60 13 11 5 4 0.2 0.2 61-90 6 5 2 2 0.2 0.2 * All % at AUM level 23
Slide 25: Commercial Vehicles Finance
Commercial Vehicles Finance Business Outlook IndoStar Position Cash flow impact prominent in case of CV finance Focus on customer contact and collections with effort to customers till May 2020- Steady improvement expected reduce overdues during moratorium as vehicles start plying from May/June Used
Slide 26: Affordable Housing Finance
Affordable Housing Finance Business Outlook IndoStar Position Cash flow impact prominent in cash salaried and self Focus on customer contact and collections with effort to employed/small business (non-essential goods and reduce overdues during moratorium services) borrower segments New business to f
Slide 27: SME Finance
SME Finance Business Outlook IndoStar Position SME segment to face sharp impact due to lockdown, Focus on customer contact and collections with effort to supply chain disruption, short term demand contraction, reduce overdues during moratorium stretched debtor cycle and margin pressure Over 60% of A
Slide 28: Discussion Summary
Discussion Summary ❖ Brookfield investment in IndoStar Capital ❖ Quarterly & Annual Results ❖ Covid Update ❖ Business Update ❖ Shareholding Structure
Slide 29: Corporate Lending: Cautious approach continues (1/3)
Corporate Lending : Cautious approach continues (1/3) Corporate Lending AUM (₹ mn) AUM Breakup: RE vs. Non-RE 45,270 43,067 27% 19% 18% 36,267 44% 38% 36% 31,646 28,687 81% 82% 64% 73% 56% 62% Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Real Estate Non Real Estate •
Slide 30: Corporate Lending: Profit and Loss (2/3)
Corporate Lending: Profit and Loss (2/3) Particulars (₹ mn) Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Q4 FY 20 Revenue from Operations 1,817 1,676 1,494 1,288 1,077 Interest Expenses (790) (883) (789) (648) (610) Net Interest Income 1,028 793 704 640 467 People Costs 108 49 42 40 27 Operating Expenses 1 1
Slide 31: Corporate Lending: Key ratios (3/3)
Corporate Lending : Key ratios (3/3) Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Q4 FY 20 Revenue from Operations * 15.6% 14.7% 14.9% 14.7% 14.3% Net Interest Income * 8.8% 6.9% 7.0% 7.3% 6.2% Operating Expenses * 0.9% 0.4% 0.4% 0.6% 0.5% Cost / Income 10.7% 6.2% 6.1% 7.7% 7.7% Pre-provision Operating Profi
Slide 32: Retailisation Strategy On track
Retailisation Strategy On track AUM: CL vs Retail (%) Disbursements: CL vs Retail (%) 1,17,352 1,15,792 1,07,181 1,02,219 96,899 20,280 12,357 6,612 8,759 7,324 43% 61% 61% 57% 63% 66% 67% 69% 71% 87% 57% 39% 43% 39% 37% 34% 31% 33% 29% 13% Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2
Slide 33: Calibration in Retail Business Volumes
Calibration in Retail Business Volumes Retail AUM (₹ mn) Retail Disbursements (₹ mn) 72,083 72,726 70,914 70,574 70,989 8,675 5,478 6,364 7,080 7,699 8,310 1,308 7,570 18,849 19,017 1,014 18,637 17,968 17,482 1,530 6,340 5,904 1,384 827 866 679 745 3,742 921 47,756 47,345 45,197 45,197 5,837 44,907
Slide 34: CV Finance: Transitioning to leverage ICICI partnership (1/3)
CV Finance : Transitioning to leverage ICICI partnership (1/3) CV Finance – Monthly Disbursement Trend (₹ mn) 2,452 2191 1,777 1724 1600 1,427 1120 1,054 1,089 918 732 371 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 ✓ CV Finance AUM ₹ 45,197 mn ✓ Loans disburs
Slide 35: CV Finance: Profit and Loss (2/3)
CV Finance : Profit and Loss (2/3) Particulars (₹ mn) Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Q4FY20 Revenue from Operations 542 1,506 1,681 1,585 1,327 Interest Expenses (204) (673) (643) (613) 630 Net Interest Income 338 833 1,038 971 697 People Costs 149 255 225 206 193 Operating Expenses 115 139 144 119
Slide 36: CV Finance: Key ratios (3/3)
CV Finance : Key ratios (3/3) Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Q4FY20 Branches & Employees Revenue from Operations * 18.7% 16.6% 18.4% 18.4% 16.1% Net Interest Income * 11.6% 9.2% 11.4% 11.3% 8.5% 2,052 350 1,934 Operating Expenses * 9.1% 4.3% 4.0% 3.8% 4.2% 300 1,734 1,635 1643 2,000 Cost / Income 7
Slide 37: SME Finance: Business volumes (1/3)
SME Finance : Business volumes (1/3) SME Finance – Monthly Disbursement Trend (₹ mn) 575 465 344 351 261 297 256 234 242 242 174 32 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 ✓ Disbursement during Q4FY20 ₹ 679 mn ✓ Loans assigned / securitised ₹ 2,988 mn 36
Slide 38: SME Finance: Profit and Loss (2/3)
SME Finance: Profit and Loss (2/3) Particulars (₹ mn) Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Q4 FY 20 Revenue from Operations 585 587 679 441 428 Interest Expenses (309) (341) (314) (260) (266) Net Interest Income 276 247 365 181 162 People Costs 38 46 47 45 44 Operating Expenses 23 24 32 33 31 Pre-pro
Slide 39: SME Finance: Key ratios (3/3)
SME Finance : Key ratios (3/3) Q4 FY 19 Q1 FY 20 Q2 FY 20 Q3 FY 20 Q4 FY 20 Revenue from Operations * 13.3% 13.6% 17.1% 12.9% 13.0% Branches & Employees Net Interest Income * 6.3% 5.7% 9.2% 5.3% 4.9% Operating Expenses * 1.4% 1.6% 2.0% 2.3% 2.3% 84 98 93 89 87 Cost / Income 22.3% 28.4% 21.5% 43.1% 4
Slide 40: Housing Finance: Business Volumes (1/3)
Housing Finance: Business Volumes (1/3) Housing Finance – Monthly Disbursement Trend (₹ mn) 373 377 333 316 320 308 311 295 286 288 267 156 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 ✓Q4FY20 disbursements ₹ 828 mn ✓Impeccable portfolio quality with GNPA 0.85%
Slide 41: Housing Finance: Profit and Loss (2/3)
Housing Finance: Profit and Loss (2/3) Particulars (₹ mn) Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Q4FY20 Revenue from Operations 189 220 259 245 261 Interest Expenses (84) (112) (124) (121) (141) Net Interest Income 105 108 134 124 119 People Costs 28 55 60 58 63 Operating Expenses 28 24 25 31 36 Pre-provis
Slide 42: Housing Finance: Key ratios (3/3)
Housing Finance : Key ratios (3/3) Q4 FY 19 Q1 FY 20 Q2FY20 Q3FY20 Q4FY20 Branches & Employees Revenue from Operations * 15.8% 15.7% 16.5% 15.3% 14.6% Net Interest Income * 8.8% 7.7% 8.6% 7.8% 6.7% Operating Expenses * 4.7% 5.7% 5.4% 5.5% 5.6% 354 329 Cost / Income 53.2% 74.1% 63.4% 71.1% 83.0% 319
Slide 43: Key Takeaways
Key Takeaways Our Recent Past ✓ Prudence in wholesale lending and reduction in wholesale portfolio ✓ Building of retail infra & team across multiple segments – CV, SME and Housing Present Situation ✓ Differentiated position on capital and liquidity ✓ Normalizing Covid impact ✓ Prudent cost managemen
Slide 44: 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 (8.3% of diluted shares) ◼ 20+ years
Slide 45: 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 46: 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 47: 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 48: Discussion Summary
Discussion Summary ❖ Brookfield investment in IndoStar Capital ❖ Quarterly & Annual Results ❖ Covid Update ❖ Business Update ❖ Shareholding Structure
Slide 49: Promoters Shareholding Structure
Promoters Shareholding Structure Everstone1 48.00 % 56.89% Indostar Capital3 100.0% (Promoter) IndoStar Capital Finance Limited 52.00 % Promoter Group4 Other Investors2 3.73% Strong capital sponsorship of Everstone Group 7 ‘Private Equity Firm of the Year in India’ India and SEA US$5.0bn focused AuM
Slide 50: Shareholding Pattern
Shareholding Pattern Shareholding @ 31 March 2020 Major Shareholders Foreign Promoter & Promoter Group Body Company 2.4% Trusts Corporates Management Team and Employees* 1.9% 3.7% SBI MF Insurance 4.3% Lenarco (Advent) ICICI Prudential Life Insurance Others 9.3% HDFC MF SBI Amundi Funds Edelweiss Al
Slide 51: For Further Queries
For Further Queries Amol Joshi Chief Financial Officer Contact No: +91 98198 68337 Email - investor.relations@indostarcapital.com Media Contact Snigdha Nair Adfactors PR Email - snigdha.nair@adfactorspr.com; indostar@adfactorspr.com
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