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PTC India Financial Services Ltd
Earnings Call Analysis
Summary
Q2-2024
The company aims to increase its loan book from the current INR 7,500 crores to INR 25,000-30,000 crores by 2027, emphasizing prudence and learned lessons for cautious growth. Bad accounts have been addressed, with reduced provisions boosting this quarter's profitability. Looking ahead, there will likely be no need for additional provisioning, and the company plans to maintain or even lower credit costs, with an expected reduction in non-performing assets (NPAs) to 1% or 2%.
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Ladies and gentlemen, good day, and welcome to analyst and investor conference call to discuss Q2 FY '24 results of PTC India Financial Services Limited.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhinav Goyal, Vice President, from PTC India Financial Services Limited. Thank you, and over to you, Mr. Goyal.
Yes. So very good afternoon to all our esteemed shareholder and investor and analyst community at last. So we are pleased to announce result which we did on Friday. And now we are here to discuss our results and way forward. So today, we are having our MD and CEO, Additional Charge cum Director of Finance Mr. Mahendra Lodha. And we are also having our two Executive Director, one, Mr. S. Siva Kumar, who is citing a credit division; and another one is Mr. Kalur Srinivas, who is heading monitoring division of our organization.
We are also having Mr. Sanjay Rustagi, who is Head Finance and Senior Vice President; and I'm Abhinav this side. So now I request our MD and CEO, Additional Charge to kindly allocate the results. Over to you, Lodha sir.
Yes. Good afternoon, all our investors, shareholders and -- so welcome. All analysts, and welcome. I will just highlight, we have already published our results for Q2 on Friday, 27 October 2023. So I'll just highlight a few things of our results.
So for the quarter ended 30th September '23 we achieved a total income of INR 201.81 crores as against the previous quarter of INR 193.23 crores as well as the same quarter of the last year of '22, INR 195 crores. So profit before tax we achieved during the quarter ended 30 September '23 of INR 79.99 crores against the previous quarter figure of INR 49.24 crores as well as the last year of the same quarter of INR 70.27 crore. And profit after tax we achieved during the quarter ended 30 September '23, INR 59.77 crores as against the previous quarter figure of INR 36.76 crores as well as the same quarter of the last year, INR 52.66 crores.
So even these -- all these ratios, most of the ratios have been improved. Just like means the yield or earning has improved to 10.89% as against the 10.77% during the previous quarter and 10.58% of the same quarter in the last financial year. Net interest margin has also improved to 4.46% as compared to 4.33% during the previous quarter and 4.34% of the same quarter during last year's same quarter, September '22.
Our outstanding credit is INR 7,175 crores as on the 30 September '23. And capital adequacy ratio has also improved to 38.58% as against the INR; 34.90% during the previous quarter and 31.74% during the same quarter of the previous financial year. So the net interest margin has also improved. So as on the -- for the quarter, it is INR 4.46% as against the previous quarter, 4.33% and the last year same quarter, 4.34%.
So we have resolved few of the NPA. So in detail which my colleague, Mr. Siva Kumar will later on mention. So one other thing, I mean -- I would like to highlight, the market cap is around INR 1,750 crores. So these are just highlights. I will hand over to Mr. Siva Kumar, who will discuss in detail about the NPAs, which we have resolved or other NPAs, which are at the verge of finalization of resolution.
Yes. Good afternoon, everyone. I'm Siva Kumar. Going forward, we have around 4 NPAs in our book, and of which 2 were resolved just at the beginning of this present quarter, end of the last quarter. And one of them is Meenakshi Energy having INR 150 crore of gross loan book that got resolved through NCLT IBC route.
And also the other one is the IL&FS Tamil Nadu Power Limited wherein all the lender have agreed for restructuring under the [indiscernible] of RBI circulars and IFCI and PFS also has done the IL&FS Tamil Nadu Power restructuring by which we are expected to resolve -- yes.
The gross loan book of INR 243 crores, it will have restructured by which year, after a year it will get upgraded. But presently, we will have around INR 70 crores as cash revenue which we will get it. And other two larger books also -- larger accounts also, we are in the process of resolving, and we expect to resolve. We're in advance stages of resolving strategy, and we hope to resolve those things also by this quarter end or by early next quarter.
And as regards to other things also, we are having a pipeline of assets also and also proposals. We are evaluating, and we will take cautious call as we go forward keeping the quality of our portfolio in mind.
Thank you so much Siva sir. So I request our Executive Director, Mr. Kalur Srinivas, to have some elaboration on few of the account, which we recently recovered and way forward.
Okay. Thanks Abhinav. Thanks Lodha Ji and Siva Kumar Ji. I think other point to add is some of the other concerning assets that we had. We were in a position to settle in some of them, which is especially some of the distressed road efforts, where in the last few months, substantial portion of it was resolved and sort of despite such efforts 3 have been resolved and only 2 in which the exposure also has been very less still to be -- still to -- are in the process of culmination as far as resolution part of it is concerned.
Yes. So thank you so much, MD, sir, ED sir. So our moderator, may we request you to kindly open the session for question and answer.
[Operator Instructions]
First question comes from [ Ritu Chauhan ], an individual Investor.
Yes. You are audible. Please, go ahead, sir.
Sir, I just had one question. So going through the investor presentation, in that I saw the state power utility contribution has been decreasing over the quarter. To get an understanding what is the reason and what it churns outlook for...
Sorry, come again. Can you repeat your question, please?
I was saying that when I was going through the investor presentation, I came across this slide under Corporate Loan under respective sector respective in that the state activity contribution has been decreasing over the quarter. So I just wanted to understand the reason for the same? And what would be the future outlook?
Given our thrust towards the power sector, we have this -- the tilt towards the state power is hitting. But definitely, we are looking at to diversify our portfolio and to derisk our portfolio from the over -- on exposures. We are looking at having more project loans and more spread over to the borrowers in various other sectors, including road, water and so on.
So in that process, it's a very regular happening and through the repayment and this is what we have and it is. Also our effort to diversify our portfolio to various sectors and derisk our portfolio from over exposure to one of the sectors. So that's where we are coming from that.
Another follow-up question. So which sector you expect the most growth sector? Which sector do you expect the most loan coming in the -- coming, let's say, half year or 1 year?
We are exposing various sectors and especially there is -- EV charging and also looking at the sectors such as roads especially hybrid annuity and also renewables where we have a good take off or counter-party risks for prepayment and timely honoring the commitments. So these are the few sectors which we are looking at to grow.
[Operator Instructions]
Next question comes from Vaibhav Gupta from Bowhead India Fund.
Sir, am I audible?
Yes, sir. You are audible. Please, go ahead.
Sir, we had plans to raise funds to fuel growth. So any update in that regard, like the growth of the loan book?
Yes. So we are already approaching -- we are already in touch with all these bankers and meetings are at an advanced stage and we are about to succeed in getting the funds because earlier they were telling to just wait for one more quarter. So that's why quarterly results we have already published and now we are approaching to all banks.
And sir, what is the quantum or amount of funds we are looking today?
Right now, we are looking around INR 2,000 crores to INR 2,500 crores. Going forward, we will again approach for this higher amount with different banks.
Okay, sir. And sir, two of the accounts which have been resolved are Meenakshi and IL&FS, right, sir?
Right, right.
And have we recovered -- what are the amounts we have recovered from each of the projects?
In IL&FS, we are expecting funds in a day around INR 70 crores. And as regards, Meenakshi, it is around -- sorry. No actually it will be around INR 55 crores or INR 60 crores we will receive.
So sir, in IL&FS, is there scope to get any further funds at any later stage?
Yes, yes. Balance sheet will receive over a period and majority we will receive in the next 2 years. And balance over a period of next 11 or 12 years, we will receive.
In 11 or 12 months or 11 or 12 years?
Yes, it is a restructuring. Yes, it is a 15-year restructuring. And we will receive a major part of the funds in next 2 or 3 years, balance we will receive over..
What is the full quantum of sales received?
It is actually, it is the principal part is around INR 124 crores -- around INR 210 crores or INR 220 crores, we will receive.
Next question comes from [ Jayanth Raghavan ], an Individual Investor.
So my first question was, am I audible? Hello?
You're audible, sir.
Yes, sir. The first question is there were certain positions in the management, if I understood, which were not filled. So over a period of time, I have read that some of the positions have got filled. So is the management fully recruited now? Or are there still some positions to be filled?
Yes, I think most of the positions have already been filled. So I will just highlight. Earlier there was no any post of Executive Director. Now we are having 2 Executive Directors. One is actually Director, Credit and another is Executive Director, Monitoring. So both the Executive Directors have joined. So in addition to that, Chief Compliance Officer has also joined. And -- HIA is there, Head Internal Auditor is there, CRO is there, HEAD HR is there. So almost all the top level positions -- senior level positions have been filled. So we are expecting that regular Managing Director and CEO is also in the process of finding.
Okay. That is good to know. The second question is now when I'm analyzing your company's numbers, I am looking at it sequentially more than year-on-year because after the restructuring, we are doing a fresh start. So we are seeing a very good improvement compared to the first quarter.
And you had just mentioned that in addition to the first quarter, your lenders wanted to wait for one more quarter to decide how much to give in terms of lending. So what is your expectation going forward for the next 2 quarters? Will we be able to maintain the run rate of this profitability? Or do you see any challenges in that or whether we can see accelerated increase in the profitability and the disbursements?
Yes. So parallelly, we are working on that fundraising as well as that building that new pipeline of good proposals in the new emerging sector. And as far as profitability is concerned, we are expecting to get it increased based on that further funding as well as the further deployment of the funds.
So at this stage, if you see you are rightly told, if you compare with the results for the quarter ended 31st March '23, then quarter Q1 of '24 means 30 June '23 as well as the quarter ending 30 September '23. So a lot of improvement is there. So now parallelly, we are working on this, and we are expecting further improvement in the results.
Okay. And last question, what is the book value right now? Do you have the figure?
Yes. Right now, our book value is around INR 7,150 crores.
Per share, how much it works out to?
Sorry?
Per share. Book value per share. How much is it being out to as of September?
1 minute, 1 minute.
So we are just informing the figure. In the meantime, in case you are having any other question, may please go ahead with that.
No, I'm done. I just want this info, that's it.
Yes. And our market cap is [ INR 1,750 ] and then store prices also increased from prior to like it was higher at [ 31.4 ] something at some point of around 27, 28. So right now, it is 38.5.
[ 28.5 ], the book value?
[ 38.5 ].
[ 38.5 ], the book value.
Yes. So the market cap is, I think, lower -- much more than as compared to the net worth what we are having.
Yes, that's what I wanted to know. And lastly, what is the ROA? Is it available readily?
Yes. Yes. So return on assets -- 1 minute. For the quarter ended 30th September, it was 3.13%. It's being improved in comparison to last quarter where it was 1.92% only.
Next question comes from [ Abhishri Shah ], an individual Investor.
Hello. Am I audible?
Yes, ma'am.
So I have 2 questions. So I can see that -- can you give me some explanation on the same? Why has there been zero sanctions during this quarter. And going ahead, what should we expect?
Yes. Actually, we are looking at our fund position though we have good proposals pipeline of the order of quite good project pipeline, the proposals in hand. We are looking at our fund position and then going ahead. And that's the reason we've been slightly muted in the sanctions. And I think going forward, we will have a better sanctions once we have liquidity also in hand.
Okay. And one more question. So how do you see the sector mix going ahead?
As I told just a while ago, probably I don't know whether if I can repeat it. As we go -- we look at the sunrise sector, which are today looking at a better one, like EV -- EV charging, station, those kind of mechanisms. And also, we are looking at the largely risk-free returns like mature sectors like renewables where we have a good counterparty risks apart from the road projects and those kind of sectors, we are looking at. And we are also exploring to diversify our risks by looking at other sectors also from social infra and other things so that we will have better -- the risk profile and diversified risk in our portfolio.
Okay. So as I can see in the presentation, so we are seeing quite a bit of improvement in the sustainable infra segment. So how do you see this segment go ahead?
This segment is about to grow and especially with our commitments to have reduced our carbon emissions and more investments coming in the sustainable intra space. I think this sector is bound to grow and there are many opportunities we are evaluating, considering our size and our growth appetite.
Next question comes from [ Kunal Mehta ] from Equirus Wealth.
Sir, can you just throw some road map on your next 3 to 5 years with all the senior management positions being filled up. Can you just give me a road ahead in terms of loan book sector you just mentioned, but in terms of loan book and growth numbers.
We have working out our growth pattern. We are looking at the book size to go by from presently around INR 7,500 crores to around INR 25,000 crores, INR 30,000 crores in the next 3 or 4 years. And those with our -- we've used this time period for opportunity to resolve our bad accounts. So going forward, we will grow with more caution and with lessons learned. So we look forward to grow about by INR 25,000 crores to INR 30,000 crores our assets in next -- by 2027 with good capital adequacy and also quality of the portfolio will improve. And we are also having various plans for raising our resources to commensurate with our growth appetite.
Okay. And one more thing -- another question is most of the provisioning has been done because this quarter, probably the boost to your profitability is obviously lower provisioning of about INR 2,753-odd crores. So can you probably throw some light on the provision number going forward?
Yes. The provisioning for the bad assets, which we had 3 or 4 assets. We fully provided for -- being sufficiently provided, 2 are fully provided. And going forward, I don't see any stress in providing any additional provisions. So as such, we are entering the cleaning up phase and mostly we will succeed in cleaning. And touch wood, we may not be required to provide any further.
Okay. Any guidance on credit costs then going ahead?
Yes. Credit cost, as you said -- as I said, it will not grow from here onwards. So credit costs will remain same. And we are trying to look at and resolving it. So going forward, credit cost, we wanted to reduce it. And also -- then our NPA will be entering into 1% or 2% NPAs to go forward.
So Kunal Ji, [indiscernible] to go to -- you be here again. So if you go to Slide #26 of our investor presentation, we are having, I think, 11 [ 10 ] account as the stage 3 loan account including ROE. But out of that, majority has already been fully provided [indiscernible], right. Sir, our ED sir has already mentioned. One is IL&FS Tamil Nadu, where decent recovery is being expected, maybe INR 70 crores very shortly within a month and so on.
Then another account is Meenakshi Energy Private Limited. It is out of those top 3 NPA loan accounts, which are having some exposures. Meenakshi has already been resolved. Now the third account is the Vento Power Infra Private Limited. This is a partly commissioned solar power project where revenue is coming to the organization.
Now to the extent the provision being required since it belongs to [ FL ] group, the provision has already been provided out.
Of course, our team is working with a focus to resolve this as well, most probably in this financial year only. But at this moment, we should say that whatever be the latter provision that has already been provided off and now we -- whatever will be the [indiscernible] value, we are getting revenue to that extent.
Now the last account, which is Danu Wind Park Private Limited, which is not a NPA account, but it is exclusively loan account. So in that account also again the decent recoveries happening since this account is not -- the project is good. Only issue with this project was that the state was not honoring its commitment, now the state has started honoring its commitment.
So last year, we have recovered around INR 60 crores, INR 70 crores and this year also, we are having decent recoveries on this loan account. So overall, if you look at the portfolio of the company, it is quite impressive and good in terms of credit cost since we are not expecting anything major to come.
Now if we look at a stage 1, stage 2, stage 3, so at stage 3, we have already been explained. Now at stage 2, we were having 7 loan accounts, out of which 3 are already out from our portfolio that belonging to Sadbhav Group, 2 are in process of getting resolved.
Now 2 account -- there are no issues with the project as such major and these 2 accounts may get upgraded maybe in 1 year or 2 to a stage 1 loan account.
So the pipeline of projects on Stage 2 to Stage 3 are also getting exhausted. So that is how we're wonderfully placed at this moment to position ourselves for next level of growth so as to deliver value to our esteemed shareholders.
Okay. Okay. Thanks a lot Abhinav for this. And one last question is when you spoke about fundraising, what more is it as in entities or banks or whom are we going to tap in?
I guess you must have known that there is a lot of hearsay about the company. So that hearsay is not only among the investor community, but with bankers as well and in media as well. And because of that hearsay, bankers have suggested to wait for some time as rightly mentioned by MD sir. And once the results of 1 or 2 quarters will get published, then probably they will look for fresh funding. So we also thought that let's have a consolidation first and to position ourselves for next level of growth, which we just explained.
And now we are approaching our lenders for having a fresh line of credit to the organization. So that is the only [indiscernible] probably in front of us, and we are trying to address that also. So once it will happen, then probably the result will be evident in our performance in terms of increase in our portfolio and as well as contribution to the bottom line of the company in terms of more EPS investment.
[Operator Instructions]
We don't have any questions. I'm sorry, we have one more question, sir.
Yes, please go ahead.
Next question comes from [ Chana Mallu ], an individual investor.
At the end of this financial year, how much loan book we can expect?
Sorry. Can you repeat? Can you please comment. Can you please come again?
At end of financial year, how much loan book we can expect?
We'll be trying to [indiscernible] as much as possible [indiscernible]. To keep the loan book [indiscernible].
Total loan book, sir, total loan book, what we can expect by the end of this financial year?
That's what, sir, I'm saying minimum of around INR 7,500 crores.
So in previous Con call you said INR 9,000 crores we will try to reach.
Yes, we are trying to make we have our [indiscernible] our book size book also. So we have [indiscernible] formed the strategy and definitely maintain the present level trying to improve as much as we possible.
[Operator Instructions]
There are no further questions. Now I hand over the floor to management for closing comments.
Yes. So I think we have addressed what our queries are there from the investor side. So I would just like to highlight is the whole team is working very hard. And whatever hard work we have done during the last few months, now is the time to get the result. So everyone is trying to -- trying hard and we are trying to increase the value of the shareholders by announcing that -- by improving the performance as well as the improving the results. So thanks a lot to everyone.
Thank you. Thank you, everyone.
Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's Conference call service. You make disconnect your lines now. Thank you, and have a good day.
Thank you.
Thank you, sir.