Thread by @tycoonmindset05

Edelweiss Concall was today at 4:00 pm

Here are the Key highlights of the Conference Call 😀

@iRadhikaGupta @_soniashenoy @Moneylifers @rasheshshah @Amit_Jeswani1

- 2020 has been a year of Reset.
- Recently, economy is going through a gradual phase of recovery.
- Q2 has been as per planned
- 4 major focus
1. Progress made in the focus areas
2. Strengthening of balance sheet
3. Update on growth and business
4. Sustainability and environment

Progress on focus areas.
- Continue to focus on liquidity and equity.
- Debt to equity ratio has come down to 3.1 from 5
- Total borrowing have come down to 30k cr. from 50k cr. in 2 years
- 2k cr. would be received from PAG deal, which will make the company capital surplus

- Build great businesses, have excellent mgt. team & to form global partnership
- Reduction in Fixed cost by 23%
- Cost efficiency initiative will start to show result by the end of this fiscal year.

Balance sheet side
- Continue to improve CAPAD.
- Idea is to be very well capitalized.
- Asset & wealth mgt. business have very strong AUM of 73k cr. and 1.33 lac cr. respectively
- ARC has now 2k Cr of equity has a CAPAD of 30%
- Both operate at solvency ratio of 200%

- Liquidity position is vey strong which is at 21% of the borrowings.
- Asset quality is still under watch company has taken a proactive impairement
- Company took a massive impairment couple of quarters ago but now the company is fairly well covered.

- As an nbfc company needs to worry more about impairment than only about provisioning.

- Since NBFC has moved to IND AS it is important that even if something is not an NPA and the company expect impairment then company should provide impairment.

- Impairments are lot higher than what the NPA's would have been in the earlier structure.

- As the economy is improving asset quality should also be adequately covered.

- Retail collection have improved across the board which is a sign that economy is coming back.

- In insurance business there is an expectation of making an accounting loss.
- The company as broken even in insurance business as ex insurance profit after tax is 28 crores

- Asset mgt. business in alternatives where the company is leader, the company has closed the special opportunities business with a fund raise of 6.6k crores which is the highest fund raise in the year in private credit space.
- In Pvt. credit space the leadership is very strong

- Mutual fund business has been a great quarter
- Have closed second tranche of Bharat bond ETF and as a result the company asset mgt. AUM is at 73k crores which has doubled more than in last one year.
- Wealth mgt. there has been 24% of YOY growth, AUM has grown to 1.33 lac cr.

- Retail credit company has started growing again
- Company has disbursed almost 65 cr. in MSME scheme
- Company has also started assigning portfolio and has sold 500 cr. of mortgage portfolio to make the business Asset light.

- ARC there has been 1k cr. recoveries.
- From FY21 the company will start building portfolios again in ARC business.
- ARC is sitting on ample of liquidity but company is not worried about earnings drag.

- General insurance business has been the fastest growing in the first half of this year.
- Build the business on fintech model which is a completely digital model.

- Business have continued to well in the hard times
- Real growth will start coming back in next 2 quarters.
- Company's priority to become asset light, reducing debt and improving on cost efficiency and businesses becoming more independent.

- EWD deal with PAG is on track and is making a satisfactory progress.
- Focus is on reducing the cost of borrowing in this segment.
- The equity received from PAG deal will reduce the cost of funding and also help in profitability.

- Company is holding excess liquidity of around 3-4k cr. thus there is an earnings drag.

- Company borrowed money on the anticipation of equity raise, part of this loan will get repaid as the PAG deal is closed.

- Total provision stands at 1000 cr.

- On wholesale level, IND AS reporting works on account by account.

- Company looks at impairment as it is more important than provisioning

- Real estate markets have recovered in Mumbai and other parts of Maharashtra. Sales of the projects have been started.

- Volume uptake in sales has been strong in the month of September, October have been better than fy19.

- There is an interest in brownfield projects.

- Current wholesale book in Real estate; company has sold some account and restructure the projects

- Company is not as dependent of cashflow because ALM is fairly matched in a conservative way and the book size is small.

- If projects get delayed the company has kept adequate liquidity
- 48 projects are under watch and company remains optimistic on 40 projects.
- The recovery of cashflow from the project is not the risk but it is about ALM risk.

- Mortgages and MSME loans the company has started disbursing loan, company is seeing that bank are willing to buy portfolio at the cost of 8% so rather than borrow and grow the company is selling down asset. (AUM style)

- Wholesale credit will be done through asset mgt. format

- ARC is working on ROA of 5-8%

- Retail MSME credit will aim between 1-1.5% ROA, aim is to get around 2%

-ROE on credit business will stabilize at about 12-13%

- Credit will be only 25% of Edelweiss, rest is AMC, ARC and wealth mgt.

ECL Finance ltd
- Bought back short term bonds of 500 crores in this quarter.
- All other entities have enough liquidity
- ECL finance has enough liquidity which increasing the holding power of this segment.
- The company is working on profitability now.

- Focus is on unlocking value in most efficient manner through demerger, buyback or distribution of dividends.

- Fee income segment the company wants to capitalize.

- Building franchise with good mgt. and building global partnership and unlock value is the main focus

Refer to our Q2 FY 2021 conference call here👇👇

thetycoonmindset.com/conference-cal…