Abans Holdings Ltd Q2 FY 2025 Earnings Conference Call Transcript PDF

November 18, 2024 To, To BSE Limited (“BSE”) National Stock Exchange of India Limited (“NSE”) Phiroze Jeejeebhoy Towers The Listing Department, Dalal Street, Excha...

November 18, 2024 To, To BSE Limited (“BSE”) National Stock Exchange of India Limited (“NSE”) Phiroze Jeejeebhoy Towers The Listing Department, Dalal Street, Exchange Plaza, Bandra-Kurla Complex, Mumbai 400 001 Bandra (East), Mumbai – 400051 BSE Script Code: 543712 NSE Symbol: AHL Subject: Intimation under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) Pursuant to Regulation 30 of the Listing Regulations, we enclose herewith a copy of the transcript of the Company’s Q2 FY2024-25 earnings conference call held on Tuesday, November 12, 2024. The transcript is also being uploaded on the Company’s website i.e. https://abansholdings.com/Regulation- 30.html. Kindly take the above information on your records. Thanking you, For Abans Holdings Limited Sheela Digitally signed by Sheela Ambujkumar Gupta Ambujkumar Date: 2024.11.18 14:38:40 Gupta +05'30' Sheela Gupta Company Secretary & Compliance Officer Encl.: a/a Abans Holdings Limited Regd. Office: 36, 37, 38A, Floor-3, Nariman Bhavan, Backbay Reclamation, Nariman Point, Mumbai-400021. CIN: L74900MH2009PLC231660 Tel: +91 22 68170100 Fax: 022 61790010 Email ID: [email protected] Website: www.abansholdings.com  Abans Holdings Ltd Quarter 2 FY 2025 12 Nov, 2024 Moderator: Ladies and gentlemen, good day and welcome to the Q2 and H1 FY25 Earnings Conference Call of Abans Holdings Limited hosted by Valorem Advisors. As a reminder, all participants’ lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing ‘*’, then ‘0’ on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Miss Purvangi Jain from Valorem Advisors. Thank you and over to you, ma'am. Purvangi Jain: Good afternoon, everyone and a warm welcome to you all. I'm Purvangi Jain from Valorem advisors. We represent the Investor relations of Abans Holdings Limited. On behalf of the company, I would like to thank you all for participating in the earnings call for the second quarter of the financial year 2025. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today's call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's call. We have with us Mr. Chintan Mehta - Chief Executive Officer, Mr. Nirbhay Vassa - Chief Financial Officer and Mr. Ketur Shah - Assistant Vice President. I will now hand it over to Mr. Nirbhay for his opening remarks. Thank you and over to you, Sir. Nirbhay Vassa: Thank you Purvangi for your introduction. Good afternoon, everyone, and thank you all for joining this earnings call. Before we get into our quarter’s performance for the sake of some of you who might be here for the first time, I would like to introduce our company Abans Holdings. We are a diversified financial services company that caters to financial businesses such as institutional broking, asset management, financial lending, and treasury and remittance services. Today we have a global presence with established operations in India, United Kingdom, Mauritius, Dubai and Hong Kong. We have grown from being a company that was trading in commodities into a diversified multi asset and multinational financial services company over the years. Our income is mainly segmented under agency business, which is fee income, finance business which is lending income and capital business which is our treasury income. Through our agency business, we also offer opportunities in multi asset global institutional trading in equities, commodities and currencies. We also offer private client broking, asset management and investment advisory services, wealth management services to high-net-worth individuals. We operate our lending business through our NBFC primarily focused on providing secured and unsecured term financing to individuals and small and medium enterprises across India.  Our capital business vertical comprises mainly of our internal treasury operations, which includes physical trading of commodities along with exchange-based trading in foreign exchange, equities and commodities. I would like to extend a warm welcome to all of you as we gather here today to discuss and reflect on our company's recent performance and results. I will now go through the financial highlights for the second quarter of FY25. Our consolidated revenues grew by around 76% year on year to 641 crores. The EBITDA for the quarter stood at 46 crores, which grew by 18% year on year. The net profit stood at 27 crores, which witnessed a 17% growth year on year. Our revenue from operations for the half year ended FY25 is now at 937 crores, which has grown approximately by 50% year on year. EBITDA reported at 90 crores for the half year represents an 18% year on year growth with a margin of approximately 10%. Net profits stood at 52 crores, growing by 18% year on year. On the operational front due to better optimization of resources, the revenue is up by 51% compared to the half year ended September 23, with almost the same financial costs showing that there is place for growth without incurring significant additional costs. We achieved AUM growth of around 17% since March 31st, 2024 due to strong and consistent returns generated by the company enhancing investor confidence and increasing the visibility and strength of our brand. Correspondingly, fee income has increased by 55% compared to the same period last year, further reinforcing investor trust and our reputation. In our lending business, the management has prioritized expanding the lending business in response to favorable market prospects by actively exploring into new loan segments and testing those opportunities on a pilot basis to assess their visibility and potential. This strategic expansion led to an increase in our customer base with the new loan segments resulting in an 83,00,00,000 growth in the loan book compared to H1 FY24, which represents a 20% growth. Consequently, the operational profit from our lending business has increased by 25% over the same period, reflecting the positive impact of this targeted approach. Our capital business, which is our internal treasury operations, manages the excess capital funds line with the company and has performed exceptionally well despite the volatile market environment in the last quarter. This included factors such as Indian elections as well as the finance budget. This strong performance has led to a notable increase in our H1 performance compared to the same period last year. The company's resilience and ability to capitalize on such dynamic’s underscores its adaptability and strength in navigating complex financial landscapes. We can now open the floor for question-and-answer sessions. Chintan Bhai has just joined with me. He was in an external meeting so he will be available to answer questions. Thank you. Moderator: The first question is from the line of Mohit Upadhyay, an individual investor. Please go ahead. Mohit Upadhyay: Hello. Good afternoon. So, thanks for the opportunity. So, my first question EBITDA, it has been declined from half yearly basis like it has been from 10 to 7. So, what was the main reason behind it? Nirbhay Vassa: Sorry, your voice is cutting a little bit, Mohit, but I understand you're asking about EBITDA margins, right? Mohit Upadhyay: Correct. Nirbhay Vassa: So, like I've mentioned in the previous calls as well, EBITDA margin is because of the top line of the company, the top line of our company is segregated into three aspects, which is your fee income, your lending income as well as your treasury turnover, right. So, in whichever quarter we do larger turnovers in physical trade, the EBITDA margin percentage looks smaller. However, the profits for the quarter have increased, so you don't actually look at EBITDA margin as a function of an overall sales compared to EBITDA, you should look at it from a segment point of view. So, I would like to take your attention to our segment results which show you that there is an increase in fee income and finance or lending income and because the turnover in the treasury was higher, the EBITDA margins are lower. Mohit Upadhyay: OK, OK. So yeah, so like I was about asking what is the outlook of the business for the second- half of this financial year considering there is a lot of concern on the capital market as well as there seems to be some pressure as per news article on NBFC. So, what is the main outlook of the management for this H2? Nirbhay Vassa: One second, Chintan bhai will answer this question. Chintan Mehta: Yeah. Mohit, Chintan Mehta this side and capital markets are under pressure. We can say that if at all, we want to say that. Otherwise, if we see after COVID level, so nifty was somewhere around 12,000 level and it went to the high of 26800. So, I think it was an astonishing way of saying that it was a long bull run and what we are seeing is a correction out of a huge bull run and we are still at sub 24,000 level and these are natural months where we can say that profit bookings will come. That is what we all are looking at like FPIs and the foreign holders are booking their profit because valuation has become very expensive in India and this is their year-end. So, if you see October month, they have taken out somewhere around 1 lakh crore rupees and if you see from the money the month of November, it is still 22,000 is already been sold and we are still only on 12th of November. So, this year this every year this part of the year they booked their profit and if you see our P/E which is a trailing P/E which is somewhere around still at 23-24 level. So, I think still it is very expensive or not expensive really, but a rich valuation for our markets and I think time consolidation or time correction will definitely will be in the place. So even though if it doesn't go down to like 20,000 or below but time correction we are anticipating and that is why Nirbhay bhai said that it is a volatile time and we need to be on our edge and we have to manage our portfolio. FPIs have sold even a G-Sec holding, ok and so basically this is the reason you need expert to trade and that is why we see the better performance in the results of Abans and our AUM is also growing and people are still trusting us and we are able to by the grace of God, we are able to provide you know better returns for them with the better systems as well as be a better resource at our disposal, we are able to generate a better return and AUM also is growing continuously and we are at a run rate of AUM's improving by 40% year on year. Mohit Upadhyay: OK, OK. OK. Thanks. That's all from my side. Thank you and that's all. Moderator: The next question is from the line of page Tejpal Singh, an individual investor. Please go ahead. Tejpal Singh: Hello, Sir. Congratulations to you and your whole team on delivering great set of numbers. So, my first question is that can you explain what has driven the growth in the agency business considering that markets have corrected 8 to 10%? Nirbhay Vassa: OK so Tejpal, right. Yes, this is Nirbhay. I would like to point out that our agency business includes 4 or 5 aspects, right. It includes subscription fees. So, when someone puts in new money, we charge them subscription fee in our global arbitrage fund. There's performance fee, there's brokerage income because we have our own broking companies and there is advisory income. So, in the last quarter because of the events that have happened globally, both in US and in India, the amount of trades and churn have been high, so the brokerage incomes have been high, one. Two is inflows are still steadily coming in, especially in safe haven funds like global arbitrage funds and hence we've had a larger subscription fee and marginally our performance fees have dipped compared to the last quarter because of the performance of the market and hence we've had a flat quarter when it comes to agency fee. Otherwise, we would have done better quarter on quarter if the performance element was higher. Tejpal Singh: OK, Sir. So, my second question is that how have our arbitrage fund and PMS fund performed in terms of returns an AUM? Nirbhay Vassa: Yeah. So let me answer this in two parts. Let's just speak about the global arbitrage fund. So, the global arbitrage fund itself, the name suggests that the market volatility does not do anything worse to it, it might do something better to it. So, it has performed a couple of bits better than the last quarter in terms of performance, I think it has given the performance of.65, if I'm not mistaken per month on an average. OK. The.65 percentage for a low risk fund is very good in such scenarios and the AUM has gone up by I think 12%, if I'm not mistaken for the quarter. OK, for global arbitrage fund. For the portfolio management services or the PMS, we had 66 crores in August 23 and now our AUM stands at 152 crores and we've got fresh  inflows of 35 crores during the half year from our Foreign Fund and we've got fresh inflows worth about 10 crores from India. So, the AUM is growing steadily. It has doubled over the year and the performance is still 13% for the half year. 13% absolute number, so about 26% for the year. Tejpal Singh: That's impressive. Nirbhay Vassa: Yes, you should look at our PMS as an investor, both in terms of its performance and its value picking ability. Tejpal Singh: OK, Sir. Thank you. Thank you so much. Moderator: The next question is from the line of Yash Sanghvi, an individual investor. Please go ahead. Yash Sanghvi: OK. Good afternoon, Sir. So, Sir, in highlights you are talking about exploring new loan segments in your finance business. So, can you talk more about this like what kind of loans are, what risks? what kind of these loans to like what interest rates are we charging? Nirbhay Vassa: OK, so see, when you are a small sized NBFC in this competitive environment, one is you have to be a little bit creative when it comes to trying to understand where your money does not turn bad and also earn a good net interest margin on your funds. So, we are for the first time this quarter we have started looking at small sized loans based on both capital market traders and two is people who have shareholdings of above ₹20 lakhs. We are trying to structure loan against shares in the longer run, but right now we are ok to take an unsecured exposure of 5-6 lakh rupees per investor when he or she has a portfolio of more than ₹20 lakh so this time we have done, I think 250 to 280 loans, we have dispersed in this last quarter and we've been able to earn an IRR of between 18 to 21%. These loans are short term loans, which shall be returned to our balance sheet hopefully by March 25. Yash Sanghvi: OK, I've got it. Thank you so much, Sir. That's it from my side. Nirbhay Vassa: Thank you. Moderator: Thank you. As there are no further questions from the participant, I now hand the conference over to the management for closing comments. Nirbhay Vassa: Thank you Purvangi and thank you all of you for participating in this earnings concall from both me and Chintan Bhai. I hope we were able to answer your questions satisfactorily and at the same time offer you insights on understanding our business. I hope you all had a happy Diwali and wish you all a prosperous new year. If you have any further questions about our company, please reach out to Valorem advisors and we would be happy to answer all your questions. Thank you all. Moderator: Thank you. On behalf of Abans Holdings Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.