Sbfc Finance Limited has informed the Exchange about Investor Presentation
25th January, 2024
To National Stock Exchange of India Limited, Exchange Plaza, Plot No. C/1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai – 400051 NSE Symbol: SBFC
To BSE Limited Phiroze Jeejeebhoy Towers, 21st Floor, Dalal Street, Mumbai – 400001 BSE Scrip Code: 543959
Dear Sir(s),
Sub: Investor Presentation
Further to our letter dated 23rd January, 2024 intimating about Earnings Conference Call, please find attached the investor presentation which will be referred during the earnings call on 29th January, 2024 with investors in connection with the financial results for the quarter ended 31st December, 2023.
We request you to take this on record.
Thanking You,
Yours faithfully,
For SBFC Finance Limited (Erstwhile SBFC Finance Private Limited)
____________ Jay Mistry Company Secretary & Chief Compliance Officer ICSI Membership No. A34264 Encl. as above
SBFC Finance Limited (Erstwhile SBFC Finance Private Limited)
Registered Office: Unit No. 103, 1st Floor, C&B Square, Sangam Complex, Andheri Kurla Road, Village Chakala, Andheri (East) Mumbai - 400 059
T. : +91-22-67875300 • F : +91-22-67875334 • www.SBFC.com • Email: complianceofficer@sbfc.com CIN No : U67190MH2008PLC178270
Investor Presentation Q3 FY 2024
Safe Harbor
This presentation and the accompanying slides (‘Presentation”), which have been prepared by SBFC Finance Limited (the "Company"), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.
This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.
Forward looking statements concerning the Company's future business prospects and business profitability are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions regulations, interest and other fiscal costs generally prevailing in the economy. The Company does not undertake to make any announcement in case any of the forward looking statements become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the Company.
2
SBFC – FY24 9M Performance
Size and Growth
Distribution
Granular Book
Asset Quality
Liability Profile
Profitability
6,266 AUM YoY +40%
5,246 Secured MSME AUM
YoY +50%
2,069 Secured MSME Disbursal Value YoY +26%
21,325 Secured MSME Disbursal Volume
YoY +27%
177 # Branches
3,535 Employees
98.4% % Secured
9.70* | 0.90* Average Ticket Size: Secured MSME / LAG (Lakhs)*
%
2.38% GNPA YoY -28 bps
%
1.36% NNPA YoY -35 bps
2,417 Tangible Net worth
164 9M FY24 PAT YoY +47%
CRAR 41.5% Capital Adequacy
3.97% Return on AAUM
16 States & 2 UTs Pan India presence
1,17,715 # live customers
0.81% Credit Cost
23 Lender Relationship Count
100% in-house Sourcing
LTV 42.6% / 68.2% Secured MSME / LAG
43.46% PCR
AA- (Stable) Credit rating1
16.88% 9M FY24 Yield YoY +91 bps
%
7.47% Spread YoY +3 bps
Note: All values in ₹ Cr unless stated otherwise, All metrics as of / for the 9M FY24 unless stated otherwise; 1Long term credit rating by India Ratings is Upgraded in Q3 from A+ (Stable) to AA- (Stable)
3
Executive Summary – Q3 FY24
Asset Under Management
Disbursement1
6266
713
Branches
177
+40%
+8%
+21%
+2%
+40
+6
Gross NPA
2.38%
Yield / Spread
17.2% / 7.8%
Opex to AAUM
5.48%
-28 bps
+1 bp
+114 / +55 bps
+34 / +32 bps
+18 bps
-4 bps
PAT
64
RoAAUM
4.31%
RoATE
10.77%
+63%
+22%
+57 bps
+47 bps
-50 bps
+37 bps
1Secured MSME All figures are in ₹ Cr
YoY
QoQ
4
About the company Management and Shareholder Business Credit & Risk Financials
5
177 branches 145 Cities 16 States 2 UTs
Executive Summary
Team: Experienced, cycle-tested, professional management with strong corporate governance backed by marquee investors
Focused Segment: Offering Secured MSME loan to small businesses with focus on ₹5 lakh - ₹30 lakh ticket size
Opportunity: Market size (₹5 lakh - ₹30 lakh MSME financing) of ₹2.5 lakh crore, growing at 24%1
Go to Market Approach: Diversified pan-India network with presence in 16 states & 2 UTs: top state at 17.11% AUM
Credit Underwriting: Understanding of segment with a tested credit underwriting and risk management framework
1CRISIL Industry Report
6 6
SBFC Focus Segment – customers borrowing ₹0.05 to ₹0.3 cr Large segment within MSME of ₹2.5 lakh cr and growing at CAGR 24%
Segment
Market Size1 (₹ tn)
CAGR2 (%)
% of Market
>₹1 cr
₹0.5 – 1 cr
₹0.3 – 0.5 cr
₹0.05– 0.3 cr
<₹0.05 cr
Total
Source: CRISIL Industry Report; 1 As of Mar-23; 2 CAGR period over FY18 to FY23
3.6
1.1
0.9
2.5
0.5
8.5
13.1%
17.0%
20.4%
23.7%
29.3%
17.7%
7
42%
13%
10%
30%
6%
100%
Focus Segment
Our Journey
AUM of INR 1000cr
100 Branches
Investment by Clermont and Arpwood group
778
3
2018
1156
25
2019
1Long term credit rating by India Ratings
All figures in ₹ Cr
AUM
PAT
1648
36
2020
2221
85
2021
8
Equity Listing on NSE and BSE
Credit rating upgraded to ‘AA -’1
6266
1,00,000 customers 150 Branches 150 cr PAT Credit rating upgraded to ‘A +’
4943
150
164
50,000 customers
3192
65
2022
2023
2024 (9M)
About the company Management and Shareholder Business Credit & Risk Financials
9
Management Experienced, cycle-tested, professional management
Aseem Dhru
Mahesh Dayani
Narayan Barasia
Pankaj Poddar
MD & CEO
Chief Business Officer
Chief Financial Officer
Chief Risk Officer
Sanket Agrawal
Sumeet Ghai
Ganesh Vaidya
VM Maneesh
Sai Prashant Menon
Chief Strategy Officer and IR
Chief Human Resource Officer
Chief Technology Officer
Chief Operating Officer
Chief Collection Officer
Board of Directors Strong corporate governance backed by long term investors
Independent
Neeraj Swaroop
Chairman of the Board
Rajesh Agrawal Jt. Managing Director, Ajanta Pharma
Surekha Marandi Ex Executive Director, RBI
Jonathan Tatur Investments Clermont Group
Arjun Sakhuja Investments Clermont Group
John Mescall Managing Director Clermont Group
Amol Jain Co-founder Arpwood Partners
Managing Director
Aseem Dhru MD & CEO
11
Shareholding
Category of Shareholders
Promoters
Clermont Group
Arpwood Group
Other Major Shareholders
SBI Mutual Fund
Amansa
Malabar Funds
Steadview Capital
Massachusetts Institute of Technology
% Share
58.26%
5.48%
7.25%
4.14%
4.14%
1.87%
1.47%
Shareholding Pattern
11.89%
11.62%
10.21%
2.54%
63.74%
Promoters
Foreign Portfolio Investors
Foreign Companies
Mutual Funds, AIF, Insurance, Banks
Individuals, Bodies Corporate
# Status as on December 31 2023
12
About the company Management and Shareholder Business Credit & Risk Financials
13
Business Momentum Delivering rapid growth in recent years
CAGR: 49%
7%
3192
20%
73%
4943
18%
3%
79%
10%
2221
25%
65%
5%
4475
19%
76%
Simplify graphic
YoY : 40%
QoQ : 8%
5803
15%
2%
6266
15%
2%
83%
83%
Mar-21
Mar-22
Mar-23
Q3 FY 23
Q2 FY 24
Q3 FY 24
Secured MSME
LAG
Others
Secured MSME
LAG
Others
All figures in ₹ Cr.
AUM
14
Business Momentum – Secured MSME Growth in both Volume & Value
AUM
YoY: 50%
4787
QoQ: 10%
5246
3491
ATS in ₹ Lakhs
Disbursement Value
Disbursement Volume
YoY: 21%
QoQ: 2%
701
713
9.92
9.38
590
9.79
YoY: 26%
7065
QoQ: 8%
7605
6029
Q3 FY 23
Q2 FY 24
Q3 FY 24
Q3 FY 23
Q2 FY 24
Q3 FY 24
Q3 FY 23
Q2 FY 24
Q3 FY 24
AUM Secured MSME All figures in ₹ Cr
15
Business Momentum Co-origination – Validates our profitable origination
Co-origination Disbursement (₹ Cr)
Co-origination AUM (₹ Cr)
%1
23%
23%
19%
14%
18%
18%
160
137
135
843
962
503
Q3 FY 23
Q2 FY 24
Q3 FY 24
Q3 FY 23
Q2 FY 24
Q3 FY 24
1Percentage is on Total Secured MSME Loans
16
Business Momentum No concentration risk & well distributed growth
Present in 16 states, 2 UTs covering 145 cities via 177 branches
Driven by steady rise in AUM per branch
4
10
1
3
3
6
25
11
7
8 6
13
4
21 6
20
23
10
1
7
42
52
61
Branch Mix
22
South North
East West
18.3%
39.3%
₹6266 Cr AUM Mix
32.5%
9.9%
South North
East West
17
# Branches
46
28
103
177
<12 months
>12 & <36 months
>36 months
43
37
45
₹ Cr
43
37
27
8
8
9
Q3 FY 23
Q2 FY 24
Q3 FY 24
Vinatage =<12M
12M<Vintage<36M
Vintage>=36M
50 45 40 35 30 25 20 15 10 5 0
About the company Management and Shareholder Business Credit & Risk Financials
18
Credit Underwriting Tailored to service underserved, underbanked informal customers
Most small businesses in India have challenges
Partial Income Proof
Limited Commercial Credit History
Collateral with local nuances
Bank Statements with Limited Transactions
Small scale businesses lack resilience
•
•
• •
• •
• •
• •
SBFC's business model, backed by experience in this segment
Credit officer spends time to understand income & cash flow (documented + non-documented) at family level Evaluation of historical asset creation
SBFC customers are often first-time commercial borrowers with past consumer loans Reference check from the neighbourhood, locality and their customer and suppliers
Local team with knowledge of local nuances and local collateral dynamics Spouse or parent act as co-borrower on all loans
Analytics driven ‘customer segmentation’ Triangulation of income sources from multiple data points
Focus on services/ trading/ retailing businesses Customer with businesses in essential services - less impacted by macro down-cycles
Deep understanding of customer behavior (over 64K MSME customers) & strong knowledge of local markets (16 states, 2 UTs)
19
Credit Underwriting Quality borrowers with credit score above 700
Over 84% AUM from customers with CIBIL >7001,2
Granular loan book with high quality collateral1
0/-1
<650
> 650 & < 700
7.4% 4.3% 8.5%
7.9% 2.1% 7.7%
7.7% 1.3% 7.0%
79.8%
82.3%
84.0%
> 7002
CIBIL Score
Mar'22
Mar'23
Dec'23
> 700
> 650 & < 700
<650
0/ -1
1Pertains to secured MSME Loans; 2>700 range is combination of 700 -750 & >750 numbers
20
94% AUM secured by self occupied residential / commercial property
42.6% LTV
100% co-borrower Spouse, parent acting as one
92% women Borrowers / co-borrowers
No industry >10% Sector exposure not more than 10% of our loan portfolio
Credit Indicators
Gross NPA %1
2.66%
2.54%
PCR
36.1%
39.6%
2.37%
44.6%
2.38%
43.5%
Net NPA %2
1.71%
1.55%
1.33%
1.36%
Q3 FY 22-23
Q1 FY 23-24
Q2 FY 23-24
Q3 FY 23-24
Q3 FY 22-23
Q1 FY 23-24
Q2 FY 23-24
Q3 FY 23-24
1+ DPD %3
Collections Efficiency %4
5.49%
5.51%
5.27%
5.61%
97.75%
97.17%
97.49%
97.47%
Q3 FY 22-23
Q1 FY 23-24
Q2 FY 23-24
Q3 FY 23-24
Q3 FY 22-23
Q1 FY 23-24
Q2 FY 23-24
Q3 FY 23-24
Note: 1. 2. 3. 4.
Gross NPA% (Stage 3%) as per IND AS (including EIR adjustment). Net NPA% is as per IND AS. 1+ DPD % is for secured MSME at AUM level Collections efficiency defined for Standard Secured MSME loans as “amount of EMI received during the month, restricted to a max of 1 EMI per loan divided by EMI demand for the current month”
21
ECL Provisions Summary
As on December 31, 2023 Gross Loans Outstanding ECL Provision Net Loans Outstanding ECL Provision %
As on September 30, 2023 Gross Loans Outstanding ECL Provision Net Loans Outstanding ECL Provision %
As on December 31, 2022 Gross Loans Outstanding ECL Provision Net Loans Outstanding ECL Provision %
Stage 1 5,151 32 5,119 0.62%
Stage 1 4,811 30 4,781 0.63%
Stage 1 3,876 25 3,851 0.64%
Stage 2 241 13 229 5.21%
Stage 2 225 13 212 5.91%
Stage 2 136 12 124 8.50%
Stage 3 132 57 74 43.46%
Stage 3 122 55 67 44.62%
Stage 3 109 40 70 36.10%
Total 5,524 102 5,422 1.84%
Total 5,158 98 5,060 1.91%
Total 4,121 77 4,045 1.87%
All figures in ₹ Cr
22
Collections Approach In-house, on-ground collections teams – 96% collected digitally
Rework icons
On-ground Teams
Scalable Structure
Adaptable collection strategy as per loan stage
Branch staff from local area
+
Branch area- limited radius
quick attention to customer issues
In-house legal team
Backed By Tech
Analytics early warning
Delta/ Omega for focused efforts
Loan Stage
Normal
• Call center autodial
Independent collection vertical dedicated to ensure collection efficiencies
Initial stages of delinquency
• Soft collections + SMS reminders • Initiate recovery in case of
default
NPA
• Legal action if unable to recover
Tele Calling
Field Collection
Legal collection
Real-time mobile tracking
Call centre - autodial
23
About the company Management and Shareholder Business Credit & Risk Financials
24
Financial Performance Quarterly Trends in KPIs
(₹cr)
YoY : 40%
4475
AUM
QoQ : 8%
6266
5803
16.04%
Yield
16.84%
17.18%
Spread
7.24%
7.47%
7.79%
Q3 FY 23
Q2 FY 24
Q3 FY 24
Q3 FY 23
Q2 FY 24
Q3 FY 24
Q3 FY 23
Q2 FY 24
Q3 FY 24
Opex to AAUM
Gross NPA
RoAAUM
5.52%
5.48%
2.66%
5.30%
2.37%
2.38%
11.27%
10.40%*
10.77%
RoATE
4.3%
3.7%
3.8%
Q3 FY 23
Q2 FY 24
Q3 FY 24
Q3 FY 23
Q2 FY 24
Q3 FY 24
Q3 FY 23
Q2 FY 24
Q3 FY 24
*The company has received an equity infusion of Rs. 600 crore in Q2 FY 24
25
Financial Performance Trends in KPIs – 9M
AUM
YoY : 40%
6266
(₹cr)
4475
Yield
Spread
16.88%
7.44%
7.47%
15.97%
16.88%
7.47%
9M FY 23
9M FY 24
9M FY 23
9M FY 24
9M FY 23
9M FY 24
Opex to AAUM
Gross NPA
RoAAUM
5.84%
2.66%
5.48%
2.38%
10.96%*
3.97%
RoATE
10.82%
3.77%
9M FY 23
9M FY 24
9M FY 23
9M FY 24
9M FY 23
9M FY 24
*The company has received an equity infusion of Rs. 600 crore in Q2 FY 24
26
Sources of Borrowing
Diversified Borrowing Mix
AA– (Stable) A+ (Stable)
1.0%
17.4%
18.8%
32.0%
Lenders to the Company
10.5%
1.1%
1.0%
7.9%
30.5%
5.2%
43.8%
NCD
Private Sector Bank
Financial Institutions
Public Sector Banks
Securitization
Co-Origination
Foreign Bank
0.4%
6.4%
13.4%
10.6%
NCD Financial Institutions Securitization FCNB
Private Sector Bank Public Sector Banks Foreign Bank Co-Origination
Q3 FY23
Q3 FY24
21
Number of Lenders
23
Public Sector Banks
Private Sector Banks
Financial Institutions (FIs)
27
ALM – December 2023
Upto 3 months
Upto 6 months
Upto 1 Year
Upto 3 Years
Upto 5 Years
5+ Years
All figures in ₹ Cr
715
1,013
1,037
1,765
1,731
2,546
3,601
4,144
3,965
Liablilities
Asset
28
Surplus
298
727
815
543
6,386
2,421
6,847 6,847
Summary Financial Statements – Profit & Loss Account for Q3 FY24
Quarter Ended
Growth (%)
Particulars H1 FY24 Performance
Interest Income on Loans
Interest Income other than on Loans
Fee & Other Income
Total Income
Finance Cost
Operating Expenses
Pre-Provisioning Operating Profit
Credit Cost
Tax Expense
Profit after Tax
Basic EPS (₹/ Share)
Diluted EPS (₹/ Share)
All figures in ₹ Cr
December 2023
September 2023
December 2022
225
12
27
264
85
81
98
12
22
64
0.60
0.58
205
15
27
247
89
76
82
11
18
53
0.52
0.51
29
155
15
25
194
76
56
63
10
13
39
0.52
0.49
Q-o-Q
9.4%
2.3%
7.1%
-5.1%
7.4%
20.1%
Y-o-Y
45.1%
9.2%
35.8%
11.7%
46.0%
55.8%
21.7%
62.9%
Summary Financial Statements – Profit & Loss Account for 9M FY24
Nine Month Ended
Growth (%)
Annual
Particulars H1 FY24 Performance
Interest Income on Loans
Interest Income other than on Loans
Fee & Other Income
Total Income
Finance Cost
Operating Expenses
Pre-Provisioning Operating Profit
Credit Cost
Tax Expense
Profit after Tax
Basic EPS (₹/ Share)
Diluted EPS (₹/ Share)
All figures in ₹ Cr
December 2023
December 2022
422
43
67
532
198
166
168
25
36
107
1.22
1.17
618
42
80
740
262
225
253
33
56
164
1.64
1.60
30
Y-o-Y
46.4%
19.5%
39.2%
32.7%
36.0%
50.2%
52.9%
March 2023
595
59
86
740
276
230
234
32
52
150
1.71
1.62
ROE Tree
Ratios
9MFY24
9MFY23
Interest Income on Loans/ Average Loan Book
16.9%
16.0%
Fee & Other Income/ Average AUM
Finance costs/ Average Borrowings
Spread
Net Interest Margin/ Average AUM
Operating Expenses/ Average AUM
Credit Cost/ Average AUM
Profit after Tax/ Average AUM
Leverage (Avg AUM/ Avg Tangible Equity)
1.9%
9.5%
7.5%
9.7%
5.5%
0.8%
4.0%
2.8
2.3%
8.6%
7.4%
9.4%
5.8%
0.9%
3.8%
2.9
FY 23
16.1%
2.2%
8.7%
7.5%
9.5%
5.8%
0.8%
3.7%
3.0
RoATE
11.0%
10.8%
11.1%
FY 22
15.5%
2.2%
8.1%
7.5%
9.7%
6.8%
1.8%
2.5%
2.6
6.6%
31
Balance Sheet
Particulars
Assets Cash and Bank Balances Derivative Instrument Receivables Loan Assets Investments Other financial assets Current & Deferred tax assets (Net) Property, Plant and Equipment Intangibles Other non-financial assets Total Assets Liabilities and Equity Derivative Instrument Payables Borrowings Other financial liabilities Non-Financial Liabilities Equity & Reserves Total Liabilities and Equity
All figures in ₹ Cr
December 2023
Quarter Ended September 2023
December 2022
434 - 20 5,422 471 7 5 33 264 5 6,661
7 46 3,648 277 6 2,677 6,661
32
714 4 12 5,060 476 8 5 33 263 6 6,581
- 54 3,657 261 10 2,599 6,581
584 - 10 4,045 362 4 22 33 264 11 5,335
- 13 3,403 222 15 1,682 5,335
Annual March 2023
400 - 11 4,415 607 4 - 34 263 12 5,746
- 13 3,739 251 16 1,727 5,746
THANK YOU!
33
PRIVATE & CONFIDENTIAL