Inditrade Capital Ltd Q2 FY20 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Management growth scorecard
Revenue
Category 2
Margin
Category 2
Fundraise
Yes
Order
Yes
Capex
Yes
3 of 5 growth signals are positive.
Full analysisRevenue 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.
See what Inditrade Capital Ltd management said on margin guidance — free account, 30 seconds.
Fundraise plans
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.
See what Inditrade Capital Ltd management said on order book — free account, 30 seconds.
Capex plans
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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Margin guidance
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.
Order book
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.
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What Inditrade Capital Ltd's management said in earlier quarters
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