Capitaline

Analyst Meet / AGM 14-Nov-17

Conference Call

PTC India Financial Services

Expects to maintain spreads of 2.75-3.10% for near-to-medium term

PTC India Financial Services (PFS) conducted a conference call on 14 November 2017 to discuss the financial results of the company for the quarter ended September 2017. Dr. Ashok Haldia, MD&CEO addressed the call:
Highlights:

The loan assets rose at moderated pace 12% to Rs 10550 crore end September 2017. Meanwhile, the non-fund based commitment surged 175% to Rs 1572 crore. Thus, the outstanding credit (aggregate of funds based and non-fund based exposure) increased 21% to Rs 12122 crore end September 2017.

The company expects the credit growth of 25-30% for near term. With Capital Adequacy Ratio of over 25%, the company is adequately capitalized to support continued growth while managing the legacy of stressed portfolio.

The debt sanction during the quarter aggregated to Rs 3359 crore comprising mainly of Rs1919 crore to renewable projects, Rs 540 crore to highways and Rs 650 crore to transmission projects. The fresh sanctions in Q2FY2018 have been approved only for existing borrowers.

The cumulative effective debt sanctioned stood at Rs 21158 crore end September 2017.

The financial performance of the quarter has been impacted by provisioning against an equity investment which the lenders are to refer to NCLT for resolution. The company has made additional provision for equity investment in East Coast Energy reaching the overall provision to 50% of investments. The company has also made provisions of Rs 18 crore for other stressed assets.

The Net Interest Margin (NIM) and spreads of the company dipped to 4.15% and 2.12% for Q2 FY2018, which were impacted due to interest income de-recognition of Rs 40-45 crore on account of restructuring of loans under SDR scheme. The exposure of the company under SDR scheme stood at Rs 450 crore end September 2017.

Adjusted for the impact of stressed loan assets, NIM and Spread for Q2FY2018 stood at 5.09% and 3.06% respectively compared to NIM and Spread of 5.56% and 3.69% during Q2FY2017 respectively.

However, the company expects the spreads of 2.75-3.10% for near-to-medium term.

Fee based income increased to Rs 22 crore in Q2FY2018 from Rs 14 crore in Q2FY2017.

The renewable power sector has 58% share in loan book of the company, while the company does not see any stress in its renewable power sector exposure.

There were no fresh slippages of loans in Q2FY2018.

As per the company, the pace of asset quality resolution has increased sharply in the system and all the lenders are aggressive in resolving NPAs. Among the NPA accounts of the company, the one NPA account is referred to NCLT, one account is looking for refinancing of loans, two accounts are considered for reducing outstanding loans and another two accounts are operational and may be sold to ARCs.

The company expects to achieve resolution for NPA amounting to Rs 200-300 crore in FY2018.

The company is awaiting new hydro power policy of the Government of India, which is expected to provide relief to the asset quality resolution of stressed projects in the hydro power sector.

The standard restructure advanced book of the company has dipped to Rs 543 crore end September 2017 from Rs 750 crore end June 2017.

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