Apollo Finvest (India) LtdQ3 FY23Finance

Apollo Finvest (India) Ltd

Q3 FY23 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 3

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→Expect significant ramp-up in lending AUM in Q3 and Q4 as new fintech partners align with Apollo's sustainable lending values (Page 8).
→Growth driven by increase in number of partners onboarded, number of loans, and overall EM (Expected Margin) (Page 5).
→Anticipate 2-3x growth in AUM relative to net equity with a goal to reach equity-to-asset ratios between 2.5 to 3.5 over time (Pages 6 and 12).
→Focus on efficient capital utilization leading to higher ROEs (~20% PBT) facilitating organic scaling without excessive equity dilution (Pages 6 and 12).
→Emphasis on sustainable, unit economics positive partnerships, especially with NBFCs via co-lending models, to drive prudent growth (Page 4).
→Growth strategy includes leveraging both Apollo’s internal equity and planned increase in debt from banks and family offices (Pages 9 and 13).

Category 3

→Apollo Finvest anticipates a significant ramp-up in AUM (Assets Under Management) in Q3 and Q4 due to better-aligned fintech partnerships and a more sustainable digital lending ecosystem.
→The company expects growth driven by the increase in the number of partners and loans.
→They aim for equity-to-assets ratios of 2.5 to 3.5x by efficiently leveraging debt and equity without substantial dilution.
→Apollo targets delivering strong ROEs (~20% PBT) while scaling up, enabling organic growth and capital addition.
→Growth in lending will be high-quality, short-term loans typically ranging from ₹10,000 to ₹1-2 lakhs, with loan durations between 3 to 12 months.
→Fee and commission expense reversals and cautious provisioning impact short-term earnings accounting.
→Overall, Apollo is optimistic about growing its top line, primarily driven by interest income.

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Yes

→Apollo Finvest plans to exhaust its internal equity base within the next couple of quarters due to rapid growth.
→Post equity exhaustion, the company is preparing to leverage its balance sheet by taking on debt.
→The management is already in conversations with family offices for future capital needs.
→Longer-term plans involve building relationships with banks to raise debt, though it is recognized as challenging.
→The current priority is maximizing deployment of existing equity, followed by detailed debt planning.
→Apollo expects to achieve equity to AUM ratios between 2.5 to 3.5x while maintaining strong ROEs.
→Fundraising will likely be a mix of equity and debt to support scaling, with debt playing an increasingly important role after internal equity is utilized.
→The company aims to raise capital more efficiently than competitors due to high ROIs and sustainable lending models.

Yes

→The transcript does not explicitly mention "current or expected orderbook" or "pending orders."
→However, Apollo Finvest is focused on ramping up lending volumes, especially through co-lending partnerships and fintech collaborations.
→They expect significant growth in loan originations and Assets Under Management (AUM) in Q3 and Q4, driven by stronger fintech partnerships aligned with sustainable lending models.
→Loan ticket sizes typically range between ₹10,000 to ₹2 lakhs, with durations mostly between 3 to 12 months.
→Apollo plans to exhaust internal equity soon and is already engaging with banks and family offices for debt to scale up lending.
→They are optimistic about growth post the digital lending guidelines adjustment period being over.
→Emphasis is on building a high-trust brand with unit economics-focused sustainable growth rather than rapid expansion without quality assurance.

Yes

→Apollo Finvest plans to exhaust its internal equity (approx. ₹57 to 60 crores) within the next few quarters as part of its growth strategy.
→Post-exhaustion of equity, the company intends to raise debt through banks and family offices to scale operations more efficiently.
→The target equity to debt ratio is around 2.5 to 3.5 to maintain strong return on equity and sustain organic growth without excessive dilution.
→The company is focusing on leveraging debt alongside equity for future lending, indicating capital investment in expanding its loan book.
→Apollo is actively engaging in co-lending partnerships with NBFCs and fintechs to optimize capital utilization and improve unit economics.
→No explicit mention of large one-time strategic capital expenditures, but emphasis is on scaling lending via strategic capital and technology partnerships.

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