Ibull concall -
Aim to addressing concerns on merger cancellation.
Shared a business model of how things will change in future
Highest capital adequacy withij nbfc segment at 27 pct. Bajaj finance is at 21 pct
Very high liquidity on books - more than covers next 12 months repayments
4x of avg liquidity of sectors
No reason why the past returns ratios will not continue in the past
Paid more thn 10k Cr in dividends amounting to 220 per share which is higher than current price.
Will continue to pay dividends in the same way
Firm follows highest level of corporate governance with very strong brands
Being audited by one of top 4 auditing firms since inception
Banking thought process was to get access to liability franchise. Not getting license was disappointing
Dependence on wholesale asset is lower than what it was 6 months back. Will continue to run down developer loan book
Bank is much better prepared to capitalize housing opportunity as it had made changes for banking license
Group company ibrel had raised capital by asset monetization and is net debt free
Entire group is much lighter now on leverage part
Reduced reliance on short term papers and its now only 500 Cr
Securitization has gone to different level in the last 12 months
Following the default from ilfs company has been sharing detailed ALM breakup at quarterly level
Recent PIL has clouded the perception about the company.
Have submitted evidences to show accusations are completely baseless.
Company has filed a case of perjury and has been able to brong forward the hearing on 24th Oct and expect favorable ruling.
Going forward - completely retail focussed
60 pct homeloan and 40 pct will ne sme lap loans
Entering co-origination agreements with select large psu banks. This will contribute around 40 pct of incremental lending
Securitization will contribute to next 40 pct of incremental loans.
Balance 20 pct will be smart city loans
Blended roa will be around 3.4 pct and blended roe will be 26 pct at optimum leverage of 1:5
Co-origination - signed up with bank of baroda; sbi tie up is in final stages
20 pct of loans will be on ihfl books
Both lenders will have differential rates
Will be paid origination fee and servicing fee. Servicing expenses will be of the company and will bear 20 pct credit cost
To conclude - ihfl is like a phoenix; it has proven time and again that it can rise from ashes. Strongly believe we can deliver what we have been doing for years.
Q&A:
1. How much of cash and equivalent is pledged against some bank loans - Fixed deposits which are pledged are not part of this. All this cash are non lien marked. Money at banks however can be taken if ever it happens that company defaults on its obligations. Roughly 50 Cr of cash including 28k customer repayments and current cash on books to service around 20k of outflows. So no issues on liquidity.
2. Does IhFl guarantees debt of ICCL - since it is a 100 pct subsidiary so the entire debt is consoled and IhFl is responsible. Though limited gurantees given directly ihfl will continue to stand by it
3. Last 3 months amount of debt raised - in first 11 days of october have raised 500 mn usd in the form of term loans, securitization lines and commercial papers. This is very big number in current environment. Will not like to share last 3 months number.
4. Total borrowing is 89k Cr
5. Offshore bond buyback - RBI has asked to reapply in a different format. Hopeful RBI to give qpproval quickly
6. Strategy on wholesale book - expect reduction of 2000-3000 Cr every quarter in wholesale book through refinance/securitization. Will continue to fund projects which are under construction and will receive inflows from customers. Wholesale book will be down 50 pct in next 12-18 months.
7. Co-origination plans - This wil be restricted to locations where ihfl is present
8. Will continue to buyback bonds and prepay near term maturity bank loans to minimize negative carry impact
9. Group MF will have 500 Cr-1000 Cr of investment in liquid schemes of ibull MF. In last wuarter Ibull MF average size will be 2500 Cr and average exposure will be 500 Cr.
10. What is the rationale of Share BuyBack - Have ensured returns to bondholders ij the form of buyback and want similar returns for equity shareholders and so as a right gesture for employees as well as equity shareholders doing the buyback
11. Partial credit enhancement guarantee schemes update - Have got 4 approvals in this regards. Expect atleast 1 transaction to go through by the time of results
12. Any covenant in NCDs/bonds about prepayment - In case of ratings downgrade by one notch - 100-250 Cr; if from AA to AA- — 2400 Cr could be recalled - out of this 1500 Cr is repayable in next 12 months so additional only 900 Cr burden if at all this happens
13. Expect balance sheet to not shrink much as repayments - BS will be in the handle of 1 lakh Cr. Minor adjustments possible in next 6 months. 10 pct kind of growth is what Company is targeting in FY21 (thats 10K cr in full year). This is not at all an ambitious target. One should focus on predictability of profit compounding rather than balance sheet compounding
14. OakNorth investment - this has been a great financial investment for Ibulls. Optionality of 3K cr of liquid buffer. Will exercise if need be but no plans as of now.
15. Liquidity buffer will not be compromised in any situation.
16. Pricing of recent debt raising - 8.6-9 pct; mostly bank lines
17. 16000 cr of wholesale book (construction finance and LRD) - majority of the book will Be cross collateralized. Will share construction finance exposure in quarterly numbers.
18. LVB chapter and any fresh banking license application is completely closed.
19. On quarterly dividends - long term policy is 50 pct profits - continue to maintain it.
20. Fully committed to do USD bond buyback but unfortunately not in full control as RBI approval needed
21. On MCA investigation - There is no investigation of any sort. Its a data collection exercise due to amalgamation of one of the group companies and is likely near conclusion.
22. One good thing that has happened in last 1 year is all possible government and independent agencies have seen the books of ibull groups and no one has found any issues yet. So heartening that all agencies are comfortable with the book details.
23. All MFs put together have about 5000 Cr in the company whereas the company has put 7000 Cr of investments in them