Analyst Meet / AGM - Analyst Meet

27-Apr-2015, 04:12
L&T Finance Holdings conducted an analyst meet on 24 April 2015 to discuss the results for the quarter ended March 2015. Y. M. Deosthalee, Chairman & Managing Director, and N Sivaraman, President and Wholetime Director of the company addressed the call:

Highlights:

• The operating performance of the company was supported by healthy margins, increased fee income, stable opex and improvement in asset quality.
• This enabled acceleration of Rs 96 crore of provisions for increase of standard asset provisions to 0.30% from 0.25%, income reversal on 150 to 180 days past due assets and voluntary provisions on select stress accounts.
• Accelerated provisions impacted RoE by about 100 bps for FY15 and 250 bps for Q4FY15
• Gross NPA and Net NPA have shown a significant improvement due to robust collections and judicious sale of certain stress assets to ARCs.
• Provision coverage ratio improved to NPAs at 44% at end March 2015 from 28% at end March 2014.
• Company is carrying Rs 230 crore of provisions in excess of RBI norms at end March 2015.
• Loans grew 18% to Rs 47232 crore at end March 2015 over Rs 40,082 crore at end March 2014, led by healthy disbursement growth of 25% in key focus areas i.e. B2C products - tractors, two wheelers, housing and microfinance in the retail business and operational projects in the sectors of renewable power and roads in the wholesale business.
• B2C products constitute 57% of the total loan outstanding (B2B for the rest 43%) in the retail business, while operating projects account for 47% of the total loan outstanding in the wholesale business.
• Company has focused on diversifying sources of funds. It has increased proportion of market borrowings, while reduced the share of banks borrowing from 47% to 33% in FY2015.
• Company proposes to achieve a healthy asset growth of 25% for FY2016.
• The trajectory of improvement in returns is expected to continue aided by stability in key operating metrics and optimization of leverage.
• As per the company, the operating environment is yet to show significant improvement, while certain restructured assets show continued levels of stress. Unseasonal rains and expected deficient monsoon could have an impact on the rural sector in the quarter ending June 2015. Consequently, the improvement in delinquencies and stressed assets could be moderate.
• As regards the recognition of NPAs at 150 days overdue, the NPAs are expected to be at elevated levels (especially in the retail segment). However, company expects the provisioning requirements as a percentage of assets to be stable to declining.

Retail Finance

• B2C segments (Tractors, 2 Wheelers, Microfinance & Housing) and SME Finance to remain focus areas
• Asset quality improves across product segments aided by robust collections. As of March 2015, provision over RBI norms is Rs 169 crore.

Housing Finance

• Strong growth in disbursements, especially in home loan segment leads to doubling of loan book.
• Gearing improved to 10.0x indicating at optimum utilization of networth.
• Improvement in asset quality led by decrease in GNPA in both organic and inorganic portfolio.

Wholesale Finance

• Renewable and Roads to continue to be focus areas with emphasis on operating projects.
• Focus on operating projects - proportion increases to 47% with 54% of FY15 disbursements were to operating projects.
• Credit cost includes accelerated provisions of Rs 48 crore on certain stressed assets.
• Two assets of net book value Rs 159 crore sold at Rs 41 crore in Q4, loss to be amortized equally over 8 quarters.
• As of March 2015, the provision over RBI norms stands at Rs 56 crore.

Investment Management

• The investment management business clocked a 23% growth in Average Assets Under Management (AAUM) to close the year at Rs 22497 crore compared to Rs 18255 crore for the same period last year.
• Equity assets surged 78% to Rs 8774 comprising 39% of total AAUM.
• Rank based on AAUM improved to 13 in Q4FY2015.
• Improved equity mix led by higher inflows during the year and the quarter.
• Launched 2 innovative products during the year - a. L&T Business Cycles Fund (largest contributor to net sales) - AUM grew from Rs 380 crore (NFO) to Rs 1200 crore, b. L&T Resurgent India Corporate Bond Fund with AUM of Rs 220 crore.
• AMC business begins to contribute positively to the bottom line - strong growth in revenues and optimal cost structures.

Powered by Capital Market - Live News