Capitaline

Analyst Meet / AGM 14-Nov-18

Conference Call

PTC India Financial Services

Expects to resolve entire Rs 1700 crore of stressed asset by mid FY2020

PTC India Financial Services (PFS) conducted a conference call on 13 November 2018 to discuss the financial results of the company for the quarter ended September 2018. Dr. Pawan Singh, MD&CEO addressed the call:
Highlights:

The loan assets of the company increased 27% to Rs 13365 crore end September 2018 over September 2017, while the company expects to sustain current loan growth for FY2019.
The total outstanding credit - aggregate of loan assets and non-fund based commitment against sanctioned loans increased 19% to Rs 14410 crore end September 2018. The non-fund based commitment to be disbursed in coming quarters aggregates to Rs 1045 crore end September 2018.
The company is strategically moving towards higher yield structured products and also exploring to fund infra projects beyond energy value chain to augment the portfolio.
The focus of the company is on quick resolution of legacy stress assets. The company has resolved NPA accounts having principal outstanding of Rs 95.20 crore with almost full loan recovery in Q2FY2019.
The gross NPAs stood at Rs 928.44 crore end September 2018 compared to Rs 1026.24 crore end June 2018. Net NPA also declined to Rs 447.41 crore end September 2018 from Rs 503.80 crore end June 2018. The asset quality is expected to improve further by end of FY2019.
The overall stressed asset of the company stands at Rs 1700 crore end September 2018. Two assets of Rs 670 crore are in advance stage of resolution and would be resolved in Q3FY2019.
Of these two assets, One Time Settlement (OTS) with upfront recovery of settlement amount is under process for assets of SKS Power with the exposure of Rs 342 crore, documents of which have been signed and settlement amount is expected to be received shortly. The company is holding provision of Rs 204 crore against this account and expects realization of Rs 139 crore.
The other account of Prayagraj has exposure of Rs 328 crore with provisions of Rs 176 crore, while the company expects realizations of Rs 152 crore.
With the resolution of Rs 670 crore asset and another Rs 150 crore in Q3FY2018, the company expects to resolve about 50% of stressed assets by December 2018. The company also expects to resolve its rest of stressed assets by mid FY2020.
The share of thermal assets with the company has declined sharply to 17% of loan end September 2018 from 30% two years ago. With the resolution of Rs 670 crore of thermal assets, the company expects the share of thermal assets to decline to single digit in Q3FY2019.
The exposure of the company to IL&FS group stands at Rs 190 crore to Tamil Nadu coal based power project, which is servicing debt on time and has PPA for entire 1200 MW capacity with cash flows.
The margins of the company have been impacted due to competitive pressure and interest income reversals. Net Interest Margin (NIM) and Spread stood at 2.82% and 1.21% respectively for Q2FY2019. The cost of borrowing has increased to 8.34% in Q2FY2019 from 8.18% in Q1FY2019. However, the company has improved yield on loan assets on sequential basis to 9.55% and spreads to 1.21% in Q2FY2019.
With sustainable efforts for resolution of stress assets, the company is expecting for reduction in stress assets substantially in coming quarters thereby visualizing positive impact on NIM, interest spread and return on assets (ROA).
The total cumulative effective debt sanctioned stood at Rs 22403 crore including Rs 744 crore sanction in Q2FY2019.
The exposure to CPs had stood at Rs 1500 crore which has now declined to Rs 150 crore.

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