IndoStar Retail AUM Grows 49% To Rs78.64 Bn

The company has demonstrated improvement in asset quality over the last year, with consolidated Gross Stage 3 assets at 4.10% in FY24

FinTech BizNews Service

Mumbai, April 30, 2024: IndoStar, a non-banking finance company (NBFC), registered with the Reserve Bank of India classified as a Middle layered NBFC, has announced the audited financial results for the quarter and year end March 31, 2024, earlier today.

AUM Growth: The company has grown its retail AUM in its core CV and Affordable Housing businesses by 49% over the past year from Rs 5,295 crore in FY23 to Rs 7,864 crore at the close of FY’24. Consolidated AUM including assets in the legacy businesses, stood at Rs 8,763 crore.

Asset Quality Improvement: The company has demonstrated significant improvement in asset quality over the last year, with consolidated Gross Stage 3 assets at 4.10% in FY24 vs. 6.77% in FY23. In particular, the standalone Gross Stage 3 assets improved significantly, from 8.06% in March 23 to 4.97% currently, driven by keen focus on CV and SME collections and structural steps taken to sell down non-performing assets in the legacy SME business.

Progress on some key strategic initiatives:

Sale of stressed portfolio of SME and monetization of SRs

During the quarter, the company took a decisive step forward in reducing its stressed portfolio by selling a portion of its SME loan portfolio, aggregating to principal outstanding of Rs 39.5 crore, to Encore Asset Reconstruction Company. The company also transferred a portion of its standard SME portfolio with a principal outstanding of Rs 143 crore at par through Direct Assignment. In continuation of its efforts to focus on growing its interest-bearing assets, the company monetised its Security Receipts (SR) from a previous asset reconstruction transaction on its legacy CV book, realizing Rs 96.6 crore.

Equity infusion update

During the quarter, the Board and shareholders approved a fundraise of INR 456.7 crore via preferential allotment of warrants to Brookfield Asset Management through one of its private equity funds (“Brookfield”) and Florintree Tecserv LLP (“Florintree”). The company will receive 25% of the warrant subscription amount following customary regulatory approvals, with the remaining 75% being received within subsequent 18 months. Following the fund raise, Brookfield will retain its present shareholding in the Company.

Insurance Corporate agent update

During the quarter, the company received a certificate of registration to act as a Corporate Agent from IRDAI. This will allow the company to cross-sell insurance products to its customers, generating fee income.

Focus of Raising Liquidity

The company has made progress in improving its liquidity position, by raising incremental funding of ~ Rs 1,845 crore in Q4 FY24. IndoStar maintains healthy liquidity, with cash and cash equivalents including investments in mutual funds and treasury bills of Rs 940 crore, as on March 31, 2024. As the company accelerates its disbursement engine, it aims to raise a significant amount of debt, bringing its current low debt-to-equity ratio position closer to industry norms.

IndoStar Capital Finance Limited (“ICFL”) (Standalone)

ICFL delivered a PAT of Rs 20 crore in Q4 FY24, akin to its performance in Q3 FY24. The AUM for ICFL stands at Rs 6,493 crore out of which the retail vehicle finance business is Rs 5,594 crore. Disbursements during the quarter stood at Rs 1,465 crore, up 31% from Rs 1,121 crore in Q3 FY24. With a focus on collections through the quarter, Gross Stage 3 stands at 4.97% in Q4 FY24, down from 6.45% in Q3 FY24; Net Stage 3 decreased to 2.09% in Q4 FY24 from 2.78% in Q3 FY24. The company maintained a strong Capital Adequacy Ratio (CAR) of 28.9% on a standalone basis.

IndoStar Home Finance Private Limited (“IHFPL”)

IHFPL delivered a PAT of Rs 16 crore in Q4 FY24 vs Rs 6 crore in Q3 FY24, aided by AUM growth and securitization transactions. The AUM in IHFPL stands at Rs 2,270 crore in Q4 FY24, up from 2,047 crore in Q3 FY24. IHFPL continues to deliver on its core strategy of providing affordable housing loans in semi-rural and rural markets, while maintaining healthy asset quality. The company reported Gross Stage 3 assets at 1.1%. IHFPL has a Capital Adequacy Ratio (CAR) of 57.4%.

FY24 Annual Performance (Consolidated):

•      AUM at Rs 8,763 crore, up 12% from Rs 7,813 crore in FY23

•      Focus Retail AUM (CV + HFC) ~ Rs 7,864 crore; up 49% from Rs 5,295 crore in FY23

•      Disbursements (CV + HFC) of Rs 5,081 crore, up 173% from Rs 1,863 crore in FY23

•      Improved Gross Stage 3 assets at 4.10% at close of FY24 vs. 6.77% in FY23

Q4 FY24 Highlights (Consolidated):

•      AUM at Rs 8,763 crore, up 9% from Rs 8,037 crore in Q3 FY24

•      Focus Retail AUM (CV + HFC) ~ Rs 7,864 crore; up 14% from Rs 6,897 crore in Q3 FY24

•      Disbursements of Rs 1,767 crore, up 31% from Rs 1,345 crore in Q3 FY24

•      Incremental funding of Rs 1,845 crore raised during Q4 FY24

•      Debt/Equity Ratio at 2.3x times

•      Improved Gross Stage 3 assets at 4.10% for Q4 FY24

•      Net Stage 3 assets are at 1.80% for Q4 FY24

Q4 FY24 Highlights (Standalone - ICF):

•      AUM at Rs 6,493 crore, up 8% from Rs 5,991 crore in Q3 FY24

•      Disbursements of Rs 1,465 crore up 31% from Rs 1,121 crore in Q3 FY24

•      Incremental funding of Rs 1,609 crore raised during Q4 FY24

•      Debt/Equity Ratio at 1.96x times

•      Improved Gross Stage 3 assets at 4.97% for Q4 FY24

•      Net Stage 3 assets are at 2.09% for Q4 FY24

•      Strong Capital Adequacy at 28.9%, on a standalone basis

Q4 FY24 Highlights (HFC - Subsidiary):

•      AUM at Rs 2,270 crore, up 11% from Rs 2,047 crore in Q3 FY24

•      Disbursements of Rs 302 crore up 35 % from Rs 224 crore in Q3 FY24

•      Incremental funding of 236 crore raised during Q4 FY24

•      Debt/Equity Ratio at 2.6x times

•      Gross Stage 3 assets at 1.13% for Q4 FY24

•      Net Stage 3 assets at 0.81% for Q4 FY24

•      Strong Capital Adequacy at 57.4%, on a standalone basis

Key Performance Highlights (Consolidated):