Capitaline

Analyst Meet / AGM 05-Aug-19

Conference Call

PTC India Financial Services

Expects resolution of Rs 500 crore of loans in Q2FY2020

PTC India Financial Services conducted a conference call on 2 August 2019 discuss its financial results for the quarter ended June 2019. Dr Pawan Singh, MD and CEO of the company address the call
Highlights:

The company has gone ahead for making higher provision of Rs 62.70 crore in Q1FY20 compared to Rs 17.11 crore in Q1FY19, which mainly impacted the bottom line of the company.
The total outstanding credit (aggregate of loan assets + non-fund based commitments against sanctioned loans) stood at Rs 13711 crore end June 2019. Loan assets aggregated to Rs 13105 crore and outstanding non-fund based commitments aggregated to Rs 606 crore.
The company has witnessed increase in gross NPA ratio to 4.07% end June 2019 from 3.12% end March 2019 on account of slippages of one account Meenakshi Power with the exposure of Rs 150 crore. The company has made provisions of Rs 15 crore, while the company is working on the resolution of the project and do not expect a large haircut on resolution.
The company has healthy capital adequacy ratio of 21% end June 2019.
The company is expecting resolution of Rs 500 crore worth of project relating to three accounts in Q2FY2020, of which the account of Prayagraj is expected to reach resolution by end August 2019. Other two accounts are also in advanced stages of resolution. The company is expecting provision write back of Rs 10 crore on resolution of these accounts
The company has shifted its pricing policy from reference rate to cost plus based rate which has led to improvement in pricing by 230 bps, which is expected to reflect on results of subsequent quarters.
On account of tight liquidity condition, the company witnessed 100 bps increase in cost of funds, while the cost of funds as declined by 10 bps in the quarter ended June 2019. The cost of fund is expected to further decline ahead with the banks reducing lending rates.
The company has reduced exposure to thermal power sector to 13% from 30% level three years ago, while the resolution of Rs 500 crore worth projects is expected to reduce the share of thermal power sector further down to 7-8%.
The company has improved yield on loan assets to 10.29% in Q1FY20 from 9.48% in Q1FY19 and 9.63% Q4FY19. The loan yield of the company excluding the NPA portfolio stands substantially higher at 12%.
Spread and Net Interest Margin (NIM) for Q1FY20 stood at 1.16% and 2.76% respectively compared to 1.03% and 2.46% respectively in Q4FY19.
The fresh sanctions of the companies to stood at Rs 718 crore in Q1FY2020, while the company has conducted down selling of portfolio worth of Rs 400 crore and the fund raised is redeployed at the higher yield of 12%.
Amid continuous sectoral issues for the NBFC sector, the company continues to focus on improving yields, structured finance to corporates of good credit standings, rotate existing assets towards higher yields and to explore new areas for generation of fee based income and advisory services which is being strengthened in the company.
The company would continue to grow in renewable sector and sustainable financing in which it's having negligible stress and huge growth opportunities in future.
The company has also started to tap the growth opportunities in new similar areas of businesses like SBG city gas distribution, annuity based sewage treatment plants, decentralize renewal generation, electrical mobility / charging stations.
While the company has overcome the liquidity challenges and strategy is to diversification of borrowings at lower cost including enhanced borrowings from international and financial institutions taking full advantage of taking full relaxations provided by the government in ECB guidelines.
The company is working toward portfolio with better yields, innovation in structuring the transactions, focus on fee based services and resolution of stuck money in sub-standard assets and the impact of which would be felt in coming quarters. The company aims to position itself as India's premier sustainable financing company.
The early warning system of the company is helping the company to identify any risk to its portfolio. Based on early warning system, the company has exited two three accounts during the quarter ended June 2019 without any haircut. As per the company, less than 5% of its portfolio is witnessing early warning signals.
The overall renewable sector exposure of the company stands at Rs 7500 crore. In the state of Andhra Pradesh, the company has exposure to three assets with no project is showing any delay in loan servicing.
The Gross NPAs of the company stood at Rs 952 crore, while the net NPA stood at Rs 452 crore end June 2019.
Among the NPA exposure, the company has exposure of Rs 189 crore to Chhattisgarh Power with the provision of Rs 73 crore, while the company expects further provisions of Rs 35-40 crore for this account.
The exposure to Hemadri Hydro stood at Rs 42 crore with the provisions of Rs 18.21 crore, while the company is expecting provisions write- back of Rs 6 crore.
The exposure to Ikom Telecom stands at Rs 61 crore with provisions of Rs 36 crore, while the company expects to recover Rs 26 crore from sale of land and manufacturing assets.
The exposure to Kohinoor Power stands at Rs 50 crore with the provisions of Rs 35 crore, while the company expects further provisions of Rs 5-6 crore.
The exposure to Konaseema Gas stands at Rs 100 crore with provisions of Rs 35 crore, while the company expects further provisions of Rs 24 crore.
The exposure to KSK stands at Rs 45 crore with provisions of Rs 18.5 crore, while the company does not expects further provisions.
The exposure to Meenakshi Power stands at Rs 150 crore with provisions of Rs 15 crore, while the company expects further provisions of Rs 30 crore.
The exposure to NSL Nagapatnam stands at Rs 137 crore with provisions of Rs 50 crore, while the company expects provisions write-back of Rs 3 crore.
The exposure to Shalivahana Green Energy stands at Rs 12.7 crore with provisions of Rs 7.1 crore, while the company expects provisions write-back of Rs 2 crore.
The exposure to Surana Power is at Rs 96 crore with provisions of Rs 84 crore.
The company has exposure of Rs 74 crore to one NPA account with the provisions of Rs 51 crore and do not expects further provisions.

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