Inditrade Cap.Q3 FY19Finance

Inditrade Cap.

Q3 FY19 Earnings Call Analysis

Management growth scorecard

Revenue

Category 2

Margin

Category 2

Fundraise

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Revenue guidance

Category 2

→Microfinance business has been growing rapidly at about 200% in disbursement year-on-year.
→The microfinance lending book grew by 29% in the last 6 months, with expectation to reach around Rs. 500 crores by financial year-end assuming trends continue.
→Expansion strategy involves setting up branches in the first half of the year and focusing on optimizing productivity in the second half.
→MSME segment is also growing fast, though no specific industry benchmark exists.
→Agri commodity business growth is deliberately slowed due to market challenges; it remains seasonal.
→Digital micro lending is newly started with expected substantial growth due to its cost-effective nature and large market potential.
→Overall, the company aims to achieve a much stronger growth trajectory, targeting increased volumes and revenues across its segments while managing costs and NPA levels effectively.

Category 2

→Management refrains from giving formal guidance due to volatile economic and credit market conditions.
→They hope for improvement in the second half of the fiscal year and better overall performance.
→The company is focused on growth and expansion, consciously incurring costs upfront with plans to harvest benefits later.
→Microfinance loan book grew significantly (200%+ in recent quarters); expected to reach around Rs. 500 crores by year-end if trends continue.
→NIM in microfinance currently below ideal 4% (around 2.8%) but expected to improve as branches mature and disbursements increase.
→Cost of funding remains a challenge but expected to reduce gradually as interest rates drop.
→The business aims for sustained growth rather than immediate profitability, accepting flat bottom-line in short-term due to expansion costs.
→Dividend policy to be decided by the board; no firm payout guidance currently.

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Yes

→Inditrade intends to raise funds externally for its rapidly growing microfinance business, aiming to support a disbursal target of around Rs.800 crores this year.
→Fundraising is planned either later in the current year or next financial year specifically for Inditrade Microfinance, where the capital requirement is highest.
→There may be equity dilution at the subsidiary (Inditrade Microfinance) level to raise funds rather than at the holding company level.
→The company is open to exploring strategic investors who might want a stake either in the listed holding company or directly in the subsidiary.
→No specific timelines or amounts were provided for the fundraising.
→The management remains cautious about market volatility and economic conditions before giving detailed guidance.

Yes

→As of the call on November 13, 2019, the focus was on growth in various lending books rather than specific order books or pending orders.
→Microfinance net exposure stood at Rs. 283 crores with expectations to grow to around Rs. 500 crores by year-end if current trends continue.
→MSME (merchant cash advance) book was Rs. 76.34 crores.
→Agri commodity book was Rs. 104.23 crores.
→Digital micro-lending was Rs. 4.35 crores.
→Disbursement growth in microfinance was around 29% over six months.
→Management emphasized branch expansion in microfinance with disbursements starting or increasing as new branches come online.
→No explicit mention of a current or expected order book or pending orders during the Q&A.
→Emphasis on growing loan book volumes and operational expansion rather than order backlog.

Yes

→The company is open to strategic and capital investments if good opportunities arise with appropriate valuation agreeable to all stakeholders.
→There is no firm commitment currently, but they are willing to explore options for capital infusion, especially at the subsidiary level (Inditrade Microfinance) to support growth.
→Equity dilution, if any, is expected at the subsidiary level rather than the holding company.
→The company aims to grow and expand, balancing cost and scale, which may require additional capital in future.
→No explicit capex plans were detailed, but expansion continues with increasing branches, notably in microfinance and new geographies.
→The priority is on growth and increasing the book size; any funding decisions will be evaluated carefully.

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