Indostar Capital Finance Limited

IndoStar Capital Finance Limited
FY23 Performance (Consolidated) in Key Focus Areas:

 PAT of ₹ 225.2 crore in FY23 vs. loss of 736.5 crore in FY22
 FY23 Gross Stage 3 improved to 6.8% vs. 13.6% in FY22
 FY23 Retail AUM has risen to 85% vs. 84% in FY22 with a focus on used Commercial Vehicle
and Affordable Housing Finance business
Q4 FY23 Highlights:
 AUM at ₹ 7,813 crore up 2% from ₹ 7,669 crore in Q3 FY23
 Disbursements ₹ 898 crore up 72% from ₹ 522 crore in Q3 FY23
 Incremental funding of ₹ 908 crore raised during Q4 FY23
 Continued Profitability – Q4 FY23 PAT at ₹ 76 crore
 Debt/Equity Ratio sustained at 1.8X times
 Gross Collections of ₹ 918 crores
 Gross Collection efficiency of 126%
 Gross Stage 3 assets are at 6.8% for Q4 FY23
 Net Stage 3 assets are at 3.2% for Q4 FY23
 Retail AUM ~ ₹ 6,613 crore; ~ 85% of AUM
 Strong Capital Adequacy at 31.5%, on a standalone basis

Other Key Takeaways:

AUM stands at ₹ 7,813 crore

The company is focused on growing its retail business.

As mentioned in the last con call, management is focused on the higher-yielding used commercial vehicles segment and increasingly on used light CVs in tier 2 and tier-3 towns. (CV Business has demonstrated a high disbursement growth of an average of 48% CQGR, from ~ ₹ 203
crore in Q1 FY23 to ~ ₹ 657 crore in Q4 FY23)

The company is also leveraging technology-enabled systems to drive higher process adherence,
improve collection efficiencies, credit underwriting, and sales productivity.

CARE removes ‘Negative Watch’ on Rating and assigned a ‘Stable’ Outlook

As the company accelerates its disbursement engine, it aims to raise a significant amount of debt and bring its current low debt-to-equity ratio position closer to industry norms. This implies that they will disburse more in the coming quarters as the platform is set and legacy issues are resolved.

In the recently concluded OFS, IndoStar Capital and Everstone Capital Partners II LLC diluted their stakes, but Brookfield did not. This reflects their support and confidence in the business.

IndoStar Home Finance Private Limited (“IHFPL”)
IHFPL delivered a PAT of ₹ 37.8 crore in FY23, up 10.1% from ₹ 34.3 crore in FY22. The AUM in IHFPL stands at ₹ 1,623 crore, up 15.4% from ₹ 1,460 crore in Q4 FY22.
company is engaged in preliminary discussions to explore potential strategic options including a potential combination and listing of the retail mortgage portfolio of JM Financial and the home finance business of Indostar Home Finance Private Limited including other mortgage-backed businesses of Indostar.
Indostar q4 results.pdf (1.0 MB)

Disclosure: Invested