Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PTC India Financial Services Ltd (BOM:533344, Financial) has undertaken a transformation journey to resolve legacy issues and strengthen internal processes.
- The company has significantly reduced the number of qualifications on its financial statements, indicating improved governance.
- PTC India Financial Services Ltd (BOM:533344) reported a post-tax return on assets of 3.1%, an improvement from 2.4% in the same quarter last year.
- The provision coverage ratio has increased significantly to around 63-64%, compared to about 40% in the same period last year.
- The company has successfully resolved a significant asset through the NCLT process, contributing to a reduction in gross NPAs by 23% in value terms compared to last year.
Negative Points
- The company's stage three assets remain high at 5.8%, indicating ongoing challenges in portfolio quality.
- Interest costs have increased marginally, impacting the net interest margin.
- The company did not extend any new loans in Q2, indicating a cautious approach amidst ongoing transformation.
- PTC India Financial Services Ltd (BOM:533344) acknowledges that its current results are only 'okay' and not yet at the desired level of performance.
- The company faces pressure to maintain its net interest margin above 4% amidst industry-wide downward trends.
Q & A Highlights
Q: What kind of support can PTC India Financial Services expect from its parent company, PTC India, as it stabilizes and grows?
A: R Balaji, Managing Director & CEO, stated that as a listed company, any support from PTC India must be at arm's length. Currently, PTC India Financial Services has ample liquidity, and while support has been provided in the past, it is not immediately necessary. The company's rating was reaffirmed by CRISIL, indicating confidence in its current financial position.
Q: Why does it appear that no loans were extended in Q2 FY25, and what is the outlook for loan disbursements?
A: R Balaji explained that Q2 was a period of transition, focusing on proposals that meet specific risk and return criteria. While there was a slowdown, significant growth is expected in Q3, with loan disbursements anticipated to be higher than in Q1.
Q: What are the major segments PTC India Financial Services will focus on in the next 2-3 years?
A: R Balaji highlighted a focus on distributed infrastructure projects, including smaller solar and wind projects, roads, wastewater, solid waste management, and e-mobility. The company aims to be a full-scale ecosystem player in these sectors, leveraging its credit appraisal and risk assessment skills.
Q: What is the company's target debt-to-equity ratio and net interest margin (NIM) for the future?
A: R Balaji mentioned that by FY27, the company aims for a debt-to-equity ratio of 3.5-4.0. The NIM is expected to face downward pressure but will be maintained above 4% to ensure a post-tax return on assets of around 2.5%.
Q: How does PTC India Financial Services plan to manage its credit handling and reduce NPAs?
A: R Balaji stated that the company aims to reduce gross NPAs by at least 50% by March 2025. Efforts are focused on resolving large-ticket infra projects, with a target to bring down NPAs from INR 764 crores to a minimum of INR 380 crores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
