Con Call Notes for Q4-24 (CMR 80) . PPT
Co-Lending
-
Making a lot of backend investment. 2/3rd focus is building the backend.
-
HFC 880 cr equity. Following the old model Housing Fiance model 1.0.
- HF 2.0 - Co-Lending
- In 4 to 5 quarters, will be double-digit ROE (from 3% in Q4). Expect a fairly good uptick in it.
-
ARC dominant player- 40% market share
-
Wholesale reduction will take another two years, but it is becoming more and more insignificant.
- Projects are going well. Sell down are expensing. 15/20% more expensive.
- There are 4/5 projects we might have to go to NCLT, but wholesale is becoming insignificant
-
In the next two years- By selling, AIF/Nuvam will be liquidated in 2 years. Current net debt shall be reduced from 7500 to 3500 cr in the next two years.
-
Business will start giving dividends from the underlying dividends.
-
Insurance business losses have peaked. They will reduce going forward
Mutual Funds
-
NON-ETF- 100,000 cr in another 18 months.
-
MF industry- A good driver of profitability is equity AUM. In the next couple of years, we aim to achieve 50% of equity AUM. Most good players are between 50-60%
-
Equity AUM has an upfront cost.
-
Good cost to income 50 -60%. Ours is 85. Aiming to bring it in line with the industry
-
Last year invested. Opened new offices in new cities. Only in 30 cities. We could go to 100 cities.
-
Each branch takes 50/60 lakhs to set up. The branch will break even in 6/8 months, depending upon the product mix.
-
Staying power is very important.
-
13rd largest AMC in India
-
It is a scale business.
-
It takes about 5 yo 7 year and 100,000 to get to scale. New players needs 5/7 years and 3000 cr of investing to come to 100,000 cr AUM and need lof of AUM.
Corporate Debt
-
13,000 cr now
-
3000 cr of liquidity is holding
AIF (Alternative)
-
Lot of competition in private credit.
-
They are on third funds in most of our strategies. Carry income from the first and fees from the second coming in.
-
They have a track record. It matters when you are scaling your business. It need strong distribution within India.
-
They have distribution in India and abroad.
-
Deployment of around 7k in FY23 and Fy24.
-
The primary focus is risk management, not deployment.
-
FY24 will focus on closing funds, and FY25 will focus on deployment. Hope to scale the business in Fy25
-
Clocking 250 to 300 cr annualised profit (based on 75 cr PAT in Q4)
-
In the next six months (Oct to Dec quarter), long-term plan for the business including listing.
-
There are 5/6 segments called AIF. We are only in two
1- PE. We hope to do business
2- Private Credit
3- Infrastructure
4 Real estate (e.g. REIT)
5- Hedge Funds (PMS/Public)- No there -
Enough space to grow within existing spaces and also to enter into new spaces.
-
The key is expertise, which takes 5/10 years to build and build a track record and distribution.
-
Globally, when there is a fee plus carry, it is called an Alternative.
-
Valuation
- AIF trade to 10-20% of AUM
- Blackrock acquired a company and paid 15% of AUM.
- India - PE multiple is 30 to 40 for different asset management companies
Subscribe To Our Free Newsletter |