CSL Finance Limited Q4 and FY24 Earnings Conference Call Summary
Announcement
• Transcript available from May 16, 2024, earnings call.
• Hosted by TIL Advisors with key management, including Managing Director Rohit Gupta.
• Presentation followed by Q&A; caution advised on forward-looking statements.
• Transcript and materials accessible on the company website.
Financial Performance Highlights
• Assets Under Management (AUM):
• 9% quarter-on-quarter and 38% year-on-year growth, reaching Rs. 1,030 crore.
• Loan Book:
• Increased to Rs. 926 crore, with 44% from SME retail sector.
• Disbursements:
• Totaled Rs. 1,052 crore for FY24, a 39% increase.
• Asset Quality:
• Improved GNPA and NNPA; conservative provisioning maintained.
• Net Profit:
• 39% increase for FY24 despite a 4% decrease in net interest income in Q4.
• Dividend:
• Recommended Rs. 2.5 per share.
• Credit Rating:
• Upgraded to A-, enhancing borrowing capacity.
Future Outlook
• AUM Target for FY25:
• Rs. 1,450 crore with a mix of 55% SME retail and 45% wholesale.
• Expansion Plans:
• Branch network growth and off-book AUM improvement through co-lending.
• New Product:
• Suvidha loan being reengineered for Q2 rollout.
Team and Borrowing Strategy
• Team Expansion:
• Increased from 257 to 421 members for productivity and future growth.
• Borrowing Costs:
• Plans to expand lender base to reduce costs by 50-75 basis points.
Suvidha Loan Product
• Revamp:
• Digital relaunch planned for July, focusing on client onboarding.
• Growth Potential:
• Targeting Rs. 150-200 crore in AUM over 2-3 years.
Fee Income and Loan Quality
• Fee Income Growth:
• Increased from Rs. 5 crores to Rs. 9.5 crores due to retail lending and co-lending.
• Loan Book Quality:
• Emphasis on maintaining quality for sustained growth.
Technology and Credit Assessment
• Digital Transformation:
• Shift to fully digital loan origination and underwriting.
• In-House Rating System:
• Utilizes machine learning for credit analysis.
Funding Strategy
• Focus on Fabricators:
• Lending against proforma invoices to build expertise before expanding to retailers.
Collaboration and Costs
• Partnership with Synoriq:
• Effective collaboration for Suvidha platform development.
• Cost Estimates:
• Suvidha platform costs between Rs. 30 lakhs to Rs. 50 lakhs.
Collection Strategy
• In-House Collections:
• Emphasis on direct engagement and digital payment methods for efficiency.
• Active Clients:
• Approximately 850 clients in the Suvidha segment.
Conclusion
• Optimistic outlook for the upcoming financial year with growth targets set.

CSL Finance Limited Q4 and FY23 Earnings Conference Call Summary
Financial Performance
• Record Loan Book: ₹732 crore, 41% year-on-year increase.
• Portfolio Composition: 60% wholesale, 40% SME retail.
• Disbursements: Lower due to intentional reduction in wholesale lending.
• Collection Efficiency: Strong at 99%.
• Net Profit: ₹146 crore, 36% increase from the previous year.
• Asset Quality: GNPA at 0.61%, NPA at 0.35%.
Future Plans
• Branch Expansion: Plans to open 6 to 10 new branches.
• AUM Mix Goal: Targeting a balanced 50-50 mix of wholesale and SME retail by FY24.
• Growth Strategy: Focus on team, technology, and capital resources.
SME Loan Strategy
• Current Mix: 40% SME loans, aiming for a 50-50 balance.
• Risk Management: Emphasis on gradual expansion and improved credit policies.
• Client Acquisition: Selective targeting for organic growth, aiming for a new loan book of ₹210-220 crore.
Branch Breakeven and Costs
• Breakeven Point: Approximately ₹7 crore in AUM.
• Current Status: 50% of branches have reached breakeven; many expected to exceed ₹20 crore in AUM.
• Cost Estimates: CAPEX at ₹4-5 lakhs, OPEX around ₹45 lakhs annually.
Cost of Funds and New Products
• Current Cost: Approximately 11.25%, with no immediate pressure on borrowing costs.
• Unsecured Product Launch: Targeting Tier-2 and Tier-3 cities, focusing on short-term loans backed by credible data.
Loan Segments Dynamics
• Wholesale Loans: Tenures of 36-48 months, often repaid early.
• Retail Loans: Maximum tenure of seven years, average around 56-60 months.
• Disbursement Goals: Expecting quarterly disbursement run rate exceeding ₹200 crore.
Profitability and Provisioning
• Current Profitability: Already profitable with expected margin improvements.
• Conservative Provisioning: Exceeding statutory requirements to build a risk buffer.
Average Ticket Size and LTV Ratios
• Increase in Ticket Size: From ₹7 lakh to ₹10 lakh.
• LTV Ratios: Increased from 27% to 34%, focusing on higher-quality borrowers.
Collection Efficiency and SME Loan Performance
• DPD and Collection Efficiency: Typically ranges from 98% to 99%.
• SME LAP Book Size: Approximately ₹85 crore, targeting small-to-mid-sized borrowers.
Credit Rating and Market Expansion
• Credit Rating Review: Importance of strong customer base and geographical representation.
• Cautious Market Expansion: Focus on under-penetrated segments.
Balance Transfer Risks
• Minimal Transfers: Only 10 loans transferred in 18 months, primarily for larger top-ups.
• Customer Retention: Clients typically remain for 24-36 months due to fixed interest rates.
Branch Performance and Partnerships
• New Branch AUM Timeline: Typically takes 12-14 months to reach ₹10 crore AUM.
• Wholesale Lending Partnerships: Collaborations with co-lenders like Kotak and TFCI.
Conclusion
• Management's Gratitude: Appreciation for participant questions and encouragement for further communication with investor relations.