Ranvir’s Portfolio

**IIFL Finance – **

Q1 results and concall highlights –

Loan book @ 69.6 k cr, up 2 pc YoY ( due sharp contraction in Gold Loan book post the Ban on further disbursement of Gold loans by RBI )

Breakdown of loan book, Avg Yield, Gross NPAs –

Home loan book @ 28.1 k cr, up 23 pc YoY, Avg Yield @ 11 pc, Gross NPAs @ 1.29 pc

Gold loan book @ 14.7 k cr, down 33 pc YoY, Avg Yield @ 19.6 pc, Gross NPA @ 2.93 pc

Micro fin book @ 12 k cr, up 17 pc YoY, Avg Yield @ 24.5 pc, Gross NPAs @ 2.32 pc

LAP book @ 8.4 k cr, up 23 pc YoY, Avg Yield @ 18.9 pc, Gross NPAs @ 3.59 pc

Digital loans @ 4.6 k cr, up 59 pc YoY, Avg Yield @ 21.4 pc, Gross NPAs @ 3.26 pc

Construction and RE loans @ 1.4 k cr, down 46 pc, Avg Yeild @ 16.5 pc, Gross NPAs @ 1.45 pc

P&L account –

NII – 1012 vs 937 cr, up 8 pc
Other income – 380 vs 487 cr, down 22 pc
Operating expenses – 746 vs 633 cr, up 18 pc
Pre-Provisions operating profits – 647 vs 792 cr, down 18 pc
Provisions – 251 vs 190 cr, up 32 pc
PBT – 436 vs 618 cr, down 29 pc
PAT ( after minority interest ) – 287 vs 425 cr, down 32 pc

Cost of funds @ 9.1 vs 9.1 pc YoY

RBI has lifted the ban of disbursement of Gold Loans wef 19 Sep !!!

As on 05 Aug ( day of concall ), Gold loan portfolio has run down to 12.1 k cr from 26 k cr on 04 Mar ( date of ban on disbursements ). Company has returned jewellery of the customers and returned 13.5 k cr to the Banks. The acid test of quality of a portfolio is when it liquidates – here the company’s Gold loan portfolio has passed with flying colours

Company has not laid off any employees nor has closed any branches

Consol GNPAs @ 2.2 pc vs 1.8 pc YoY
Consol NNPAs @ 1.1 pc vs 1.06 pc YoY
Company’s provision coverage ratio for Net NPAs stands @ 128 pc

Company’s MFI portfolio has behaved far better than the Industry. They started tightening their lending norms in the MFI space, way back in Jan 24 ( which the Industry started doing post Mar – Apr – ie when the stress started to appear ). Also, company’s exposure to Punjab is lower – where the stress is higher

Also, because of their caution on MFI loans, the MFI book is down QoQ – it looks like a great decision – in hindsight

Banks have been a little hesitant in lending to IIFL post the RBI ban. Ex- If the company is asking for say 500 cr, banks are only releasing 100 cr. However, their caution is now seeing signs of abating

While disbursing loans in MFI segment, company doesn’t lend to a customer borrowing from > 4 sources. They also don’t lend if the customer has borrowed > 2 lakh / household

Slippages in MFI portfolio in Q1 were around 100 cr. That’s about 3.3 pc – annualised – this looks okay considering MFI is a very high margin/spread business

Disc: was holding a tracking position, intend to add more – now that the RBI’s ban has been lifted, not SEBI registered, not a buy/sell recommendation, biased

Was anyways looking to add / buy into some NBFC stocks to play the impending rate cut cycle