Highlights:

The company has exhibited strong growth in all businesses leading to highest ever quarterly profit of Rs 289 crore in Q3FY2021. The consolidated revenues of the company have increased 16% yoy to Rs 5346 crore in Q3FY2021.

Gross disbursement in lending businesses (including housing) moved up 18% yoy to Rs at Rs 5100 crore driven by focus on target segments.

NBFC

In the NBFC business, retail and SME disbursements have increased above Pre COVID level. The company has added 34 new branches opened in Q3 in semi -urban locations taking total branches to 91.

NBFC Portfolio yield stood at 11.45% with new disbursement at 12.63% for Q3FY21. The company has strong funding access and amongst best cost of borrowing in industry. CRAR ratio was comfortable at 23.2%. The company to Focus on granular portfolio mix.

NBFC business has achieved resolution of Rs 550 crore of loans (of which Rs 510 crore is corporate) in Q3FY2021. The company expects some more resolution of assets in Q4FY2021.

Without considering the Supreme Court's interim order of not classifying customers as NPA after 31 Aug, GNPA stood at 3.08% and NNPA at 1.89%. The company has restructured 1.5% of loan book in Q3 FY21.

The company expects credit cost for H2 FY21 to be at 1.25%, depending on economic conditions.

The provision coverage ratio has improved to 38.5% from 33.0% a year ago.

The collection efficiency has improved to 96.4% in December 2020 from 90% in September 2020.

NBFC NIM expanded 18 bps yoy to 5.24% and net profit improved 6% q-o-q to Rs 193 crore

Housing Finance

The housing finance company has exhibited strong rebound in gross disbursement at Rs 815 crore in Q3FY2021, up 19% qoq and 5% yoy.

The focus is on granular business with 48% disbursement in affordable segment in Q3 FY21 against 33% last year. Affordable book Mix has improved to 24% from 17% last year.

HFC NIM jumped 81 bps qoq to 3.68%, while net profit jumped 38% in Q3FY2021.

The company is planning to add 30 new locations (Tier 3-4) in Q4 and augment front line capability

The focus is on increasing retail granularity and focus on affordable segment. The construction finance book has declined 19% yoy to 4% of loan book.

The collection efficiency has improved to 96.3% in December 2020.

Without considering the Supreme Court's interim order of not classifying customers as NPA after 31 August, GNPA stood at 1.89% and NNPA at 1.26%. Incremental slippages in Q3 were from moratorium pool.

The restructured loan book stood at Rs 375 crore in Q3FY21 at 3.2% of loan book.

The capital adequacy ratio was comfortable at 19.4%.

The CoVID-19 provision stands at Rs 30 crore or 32 bps of Loan Book)

The security value stands at Rs 294 crore against Net Stage 3 assets of Rs 149 crore (1.97x security cover)

Asset Management business

Domestic AAUM of AMC business moved up 7% q-o-q with 6% q-o-q rise in Equity AAUM. The growth is aided by strong revival in retail, SIP and B-30 during the quarter.

There is strong improvement in AMC profitability with PBT/Domestic AAUM rising to 30 bps in Q3 FY21 from 28 bps in Q3FY20.

The company is maintaining overall AAUM market share (Ex. ETF) at 9.35% with fixed income (Ex ETF) AAUM Market share at 10.86%.

The company has pan India presence with 300+ locations, 81500+ IFA, 260+ National Distributors and 100+ bank partners. The company has empaneled 1500+ new IFAs in 9MFY21.

Life Insurance

Individual first year premium for life Insurance business improved 6% yoy in 9MFY21, compared with 6% decline recorded by private life insurers. The company has also posted strong growth in group new business premium by 50% yoy, higher than 15% growth for private players.

New products launched in current year contributed 25%+ of Q3 Individual first year premium.

Health Insurance

The company remained fastest growing health Insurance player with 57% yoy growth in gross written premium to Rs 859 crore in 9MFY21 with retail mix at 74%. The combined ratio for health insurance business has improved to 126% from 142% in the previous year.

The company continued to grow faster relative to industry despite a slower Q3FY21.

The surge in COVID claims in Q3 is being actively monitored

There is encouraging trends for Q4 with uptake of premium growth from December 2020.

There is strong growth in Banca with 14,000+ branches enabling access to diversified customer segments. The banca mix is 66% of retail business.

Other businesses

The company has posted healthy 2.8 times growth in the PBT of other financial services yoy to Rs 36 crore, aided by general insurance broking, ARC and Stock & Securities businesses.

Three Year outlook

In the NBFC business, the company is targeting overall Loan book 3Y CAGR for 15 - 17% and aims to raise Retail + SME mix to 65% by FY24. The company proposes to add 125 additional lean branches in Tier II/III locations in 12-18 months. The company expects NIMs to increase to 6.25%+, while improve sot to income ratio by 200 bps. The company aims to raise RoA to 2.5-2.7% and RoE to 16-17% by FY2024.

In the housing finance business, the loan book 3Y CAGR is targeted at 18 - 20% with affordable mix improving to 65% by FY24. The company proposes to build higher yielding informal segment book and increase branch footprint. Aims to improve NIMs by 50 bps and reduce cost to income ratio below 30%. The company aims RoA of 1.5-1.6% and RoE of 14-15% in housing finance business by FY2024.

In the AMC business, the company proposes to continue to grow with 3 year overall AUM CAGR of 12 - 15%. The company expects to improve Equity AAUM mix from 34% to 40% in 3 years. It aims to further improve RoE to 35-40% in AMC business.

In the life insurance business, the company is targeting individual first year premium 3 year CAGR of 15-18% and expects to continue to grow renewals at 3 year CAGR of 16-17%. The protection mix is expected to improve to 12-15% by FY24 and reduce Opex/ Premium by 150 bps to 12.5% in 3 years. The net VNB margin is expected to improve to 10% in FY2021 and 16.17% in FY2024.

In the health insurance business, the company expects to continue to grow faster than industry and raise gross written premium to Rs 1800-2000 crore range by FY22 and further higher at Rs 3200-3500 crore in FY2024. The company expects combined ratio to further reduce to below 110% by Q4FY21, while targets to achieve breakeven by Q4FY22.

The company would focus on unlocking value given the scale of our businesses and driving revenue potential through focused approach to cross sell & upsell. The company would be leveraging digital, data and analytics across the platform.

The company has a strong customer base of over 20 million providing room to scale up revenue potential by enhancing product per customer.