Five-Star Business Finance Aug-24

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Who is the Chairman and Managing Director of Five-Star Business Finance Limited?

Shalini Baskaran

Srikant Gopalakrishnan

Lakshmipathy Deenadayalan (correct)

Rangarajan Krishnan

What is the purpose of the enclosed transcript mentioned in the communication?

To summarize the annual report

To announce a new product launch

To provide details of the Earnings Conference Call (correct)

To comply with regulatory filings

What is the scrip code for Five-Star Business Finance Limited listed on BSE?

FSBFL

FIVESTAR

FST Finance

543663 (correct)

Who acted as the moderator during the Earnings Conference Call?

Sameer Bhise Signup and view all the answers

Which regulation is referenced regarding the disclosure of the transcript?

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Signup and view all the answers

What mode is established for participants during the conference call?

Listen-only mode Signup and view all the answers

When was the Earnings Conference Call for the quarter ended June 30, 2024, held?

August 01, 2024 Signup and view all the answers

What should you do if you need assistance during the conference call?

Press “*” then “0” on your touchtone phone Signup and view all the answers

What metric should shareholders focus on for the next three to four quarters?

AUM growth metric Signup and view all the answers

What change is being implemented to the branch structure?

Transforming super branches into split branches Signup and view all the answers

What was the AUM growth prediction for the full financial year?

30% plus Signup and view all the answers

Why should shareholders avoid focusing on run rate per branch?

It will appear as if business per branch is declining. Signup and view all the answers

What was the disbursement growth percentage in Q4?

20% Signup and view all the answers

What was the AUM growth in the first quarter mentioned?

7% Signup and view all the answers

What impact was anticipated in June and why?

Slight drop in business due to March's advances. Signup and view all the answers

What is the projected business run rate after splitting a super branch?

$1.25 crores Signup and view all the answers

What was the year-on-year growth of total income for Five-Star in the June quarter?

38% Signup and view all the answers

What was the highest recorded profit after tax (PAT) for Five-Star in a single quarter as stated?

252 crores Signup and view all the answers

What is the current return on equity (ROE) for Five-Star as mentioned in the report?

18.95% Signup and view all the answers

What percentage of growth did Five-Star experience in active loans year-on-year?

29% Signup and view all the answers

What was the cost of funds for Five-Star as reported?

9.65% Signup and view all the answers

Which of the following best describes the trend in the ticket size for loans at Five-Star?

Remained almost flat Signup and view all the answers

What is the yield percentage being maintained by Five-Star?

24.25% Signup and view all the answers

What was the quarter-on-quarter (Q-on-Q) growth percentage of profit after tax (PAT) from March to June?

7% Signup and view all the answers

What is now mandatory for customers before disbursement starting from May?

Setting up UPI autopay Signup and view all the answers

What was a significant issue with the previously mandated NACH process?

There were frequent translation errors Signup and view all the answers

What might prevent a customer from successfully making a UPI payment at the repayment date?

Insufficient funds in their UPI account Signup and view all the answers

What has been a result of making UPI autopay a compulsory precondition for disbursement?

Improved accuracy in payment processing Signup and view all the answers

What does the company primarily expect from the new UPI autopay requirement?

To ensure timely payments through automatic withdrawals Signup and view all the answers

What percentage of cases reported the adoption of the UPI autopay since its implementation?

100% Signup and view all the answers

Which of the following is NOT a reason why customers may fail to complete the NACH mandate post-disbursement?

Problems with UPI registration Signup and view all the answers

What can customers do if they do not have the funds in their UPI account at the repayment date?

Pay through other means Signup and view all the answers

What is the primary reason for the management overlays on ECL?

To ensure comfort around the identified number Signup and view all the answers

What has contributed to the betterment of the Probability of Defaults (PDs) and Loss Given Defaults (LGDs)?

Improved proportions and recovery rates Signup and view all the answers

What was the proportion of the current stage noted last year compared to this year?

83% last year to 87% this year Signup and view all the answers

What key time frame is used to ensure accurate PD and LGD assessments?

The last five years Signup and view all the answers

What was the significant improvement in DPDs over the past years?

DPDs have improved compared to five years ago Signup and view all the answers

What milestone did the company recently achieve?

Crossing 10,000 crores in AUM Signup and view all the answers

How does the company ensure reliability of the identified numbers in its provisions?

By building management overlays Signup and view all the answers

What does the phrase 'management overlays' refer to in this context?

Adjustments made to predicted losses Signup and view all the answers

What is the minimum seasoning period required before a customer can apply for a top up loan?

Two years Signup and view all the answers

What must a customer maintain to qualify for a top up loan?

Zero DPD status Signup and view all the answers

How does the new top up loan relate to the existing loan?

Both loans must be serviced in parallel. Signup and view all the answers

What happens to the asset quality of the loan if there is any deterioration in either loan?

It results in an automatic degradation of asset quality. Signup and view all the answers

What does the evaluation process for a top up loan include?

Checking repayment history and income changes. Signup and view all the answers

If a customer has an old loan running for seven years and applies for a top up loan after three years, how long will the new loan run?

For the next seven years from the application Signup and view all the answers

What is a key requirement for a customer when applying for a top up loan?

Must maintain a zero DPD history. Signup and view all the answers

Which of the following is NOT a factor checked during the evaluation of a top up loan?

Customer's age Signup and view all the answers

Study Notes

Five-Star Business Finance Limited Earnings Conference Call - Q1 FY25

Date: August 1, 2024
Location: National Stock Exchange of India Limited, Mumbai; BSE Limited, Mumbai
Management: Lakshmipathy Deenadayalan (Chairman & Managing Director), Rangarajan Krishnan (Chief Executive Officer), Srikanth Gopalakrishnan (Chief Financial Officer)
Moderator: Sameer Bhise (JM Financial)

Key Financial Highlights (Q1 FY25)

Asset Under Management (AUM): Crossed ₹10,000 crore in June 2024.
Profit After Tax (PAT): ₹252 crore, a record high, representing a 37% increase yoy and a 7% increase qoq.
Return on Equity (ROE): 18.95%, an all-time high in a quarter and expected to exceed 19% for the full year.
Return on Assets (ROA): 8.23% for the quarter.
Cost of Funds: 9.6% on book, decreasing to 9.47% incrementally.
Disbursement: ₹1,318 crore in Q1 FY25 (almost flat compared to March Qtr).
Collections: 98.5% efficiency in Q1 FY25.
Branch Expansion: 27 new branches opened in Q1 FY25, bringing the total to 547.
Digital Payments: Non-cash payments rose to 65% of total payments in Q1 FY25.
Liquidity: Maintaining between 15-17% AUM as liquidity buffer.

Q&A Highlights

Disbursement Growth: Moderating, but still expected to be around 20-22% qoq going forward.
Employee Additions: Relatively flat in Q1 FY25, focused on splitting existing branches, not adding new ones.
Cost-to-income: Remains low at about 34.34%, expected to stay in the 35%-36% range in the steady state.
Credit Costs: Guiding for a credit cost in the 70-80 bps range for FY25.
Borrowing Mix: Shifting towards capital markets, targeting 50% capital market borrowing and 50% bank borrowing in the long term.
Leverage: Current leverage is around 2.3x. Looking to attain 3.75-4x in 2-3 years.
Rural Markets: Maintaining a presence in rural areas while taking particular care to note the competitive situation in markets like Tamil Nadu.
Digital Payments: The company is focused on pushing digital transactions. New strategies are in place for all new disbursement transactions to include UPI as a mandatory condition.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge about the recent Earnings Conference Call for Five-Star Business Finance Limited. This quiz covers topics such as the chairman's role, important metrics, and the conference call details. Perfect for finance professionals and shareholders looking to understand the company's performance.