IIFL Finance ltd Q2 concall highlights –
Loan Book @ 73k vs 55.3k cr, up 32 pc
NII – 1001 vs 724 cr, up 38 pc
PPOP – 922 vs 654 cr, up 41 pc
Provisions – 252 vs 196 cr, up 30 pc
PAT – 475 vs 380 cr, up 25 pc
Gross NPAs @ 1.8 pc vs 2.4 pc
Net NPAs @ 1.0 vs 1.2 pc
Book Value / share @ 252 vs 215
RoE – 20.1 pc
RoA – 3.9 pc
Loan book break down –
Loans on company’s books – 44k vs 35.2k cr
Assigned assets – 18.4 k vs 15.4 k cr
Co-Lending – 10.5 k vs 4.7 k cr
Total – 73 k vs 55.3 k cr
Sector wise breakdown of loan book –
Home Loans – 24k vs 19.6k cr, up 22 pc
Gold Loans – 23.7k vs 17.8k cr, up 33 pc
LAP – 7.2k vs 5.9k cr, up 21 pc
Digital loans – 3.5k vs 1.99k cr, up 77 pc
MicroFin – 11.3k vs 6.7k cr, up 67 pc
5 yr CAGR of loans AUM growth @ 23 pc
5 yr PAT CAGR @ 28 pc
Avg loan rates –
Home Loans – 11 pc
Gold Loans – 18.5 pc
LAP – 18.6 pc
Digital laons – 22.4 pc ( primarily for MSME lending – unsecured loans )
MicroFin – 24.4 pc
AVG yeild- 17 pc
Avg cost of borrowing – 9 pc
Spread – 8 pc
Cost/Income @ 43 pc
Avg ticket size –
Home loans – 14 lakh
LAP – 7.7 lakh
Digital Loans – 0.7 lakh
Gold Loans – 0.75 lakh
Aim to reach AUM of 1 lakh cr by end of next FY
Company continues to remain cautious on unsecured lending / personal loans. Sounded skeptical of due diligence process followed by new gen Fintechs
Gold loan growth driven by company’s distribution strength
IIFL housing finance gets funding from National Housing Board at concessional rates – helps keep cost of funds under check
Company expects to maintain its NIMs at 7-7.5 pc or thereabouts
Management doesn’t see any credit demand slowdown if the economy remains robust – the way it is today
Avg life of Gold Loan portfolio is 90-120 days
Company believes, cost of borrowing has almost peaked in India. May move up-down by 10-15 bps, not beyond that
Company has slowed down its branch expansion spree. Should lead to lower Opex going fwd as more branches mature and their AUMs increase. Ex – IIFL’s gold loan branches have avg gold loan AUMs of 8 cr vs 22 cr for Mkt leader
Avg tenure of Digital loans varies from 6 months to 2 yrs. This is a high risk area. Hence the company is very aggressive in provisioning against Stage -3 assets wrt Digital loans. Despite that, returns are fairly attractive
LAP product in smaller towns etc has attractive rates. However, it also involves higher cost of origination like the cost of verifying the title, valuation of property etc
Q2 RoA @ 3.9 pc. Should be able to maintain the RoA range between 3.7-4.0
Credit cost range guidance given by the management @ 2 or thereabouts
Price war in Gold loans business witnessed in last FY is now abating. Hence the lending yields have gone back up
Co-Lending and Assigned books mainly consist of Gold, Housing loans and LAP
Current branch count at 4596 vs 3700 LY. As the new branches mature, operating leverage should kick in. On an avg, a branch breaks even in 18-24 months
Disc: Hold a tracking position, may add more, biased, not SEBI registered
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