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PTC India Financial Services Ltd

| Q3 FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤23rd Jan 26

Summary : PTC India Financial Services reported strong Q3 FY'26 performance with record disbursements and improved asset quality, projecting significant AUM growth and strategic diversification despite competitive pressures.

Management Perspective positive : Management repeatedly used phrases like 'clear inflection point', 'renewed momentum', 'highest-ever quarterly disbursement', 'growth visibility remains strong', and 'expect this momentum to continue' to describe performance and outlook.

Concall Report Analysis & Insights

Business Overview

  1. Q3 FY'26 disbursements reached INR609 crores, a 13-quarter high.
  2. 9-month FY'26 disbursements of INR1,073 crores surpassed total FY'25 disbursements.
  3. Loan sanctions for the quarter stood at INR1,188 crores, exceeding INR1,000 crores for two consecutive quarters.
  4. 100% of disbursements were to the private sector, focusing on granular approach and emerging sectors.
  5. Asset quality remains strong with no new slippages since FY'18; net NPA is INR47 crores.

Future Growth Prospects

  1. Expect Q4 FY'26 disbursements to double Q3, reaching INR1,200-INR1,500 crores.
  2. Targeting INR2,500 crores in total disbursements for FY'26.
  3. Anticipate 10-15% AUM growth by the end of Q4 FY'26.
  4. Diversifying into new infrastructure segments like oil & gas, data centers, EVs, and CBG.
  5. Aiming for a sustainable quarterly disbursement rate of INR1,000 crores in the foreseeable future.

Management Insights

  1. Q3 FY'26 marked an inflection point with renewed business momentum.
  2. Governance and legacy issues have been successfully resolved, improving business traction.
  3. The Board and its committees are fully reconstituted, strengthening management.
  4. Focus on quality lending, diversified portfolio, and mitigating concentration risk.
  5. Financial performance is positive with a qualification-free audit report and strong capital adequacy.

Signs of Skepticism

  1. The 10-15% AUM growth target for Q4 seems ambitious given past prepayments.
  2. Resolution of the Danu NPA has been consistently promised for 'soon' or 'next quarter' over time.
  3. Confidence in doubling Q4 disbursements relies heavily on pipeline conversion and fresh sanctions.

Risk Factors

  1. Heightened competition in the lending market is impacting NIMs.
  2. Need to garner more liabilities to sustain growth momentum.
  3. Prepayments by customers have moderated AUM growth.
  4. Resolution of the remaining NPA account (Danu Wind Park) is ongoing.

Good To Know

  1. The Board and Board committees have been fully reconstituted with new independent directors.
  2. The company maintains a robust capital adequacy ratio of 71% against a 15% requirement.
  3. Net worth improved from INR2,978 crores to INR3,034 crores in the current quarter.
  4. The company has INR1,400-INR1,500 crores of excess liquidity.
  5. Investor Relations team is actively pitching to institutional clients for share price appreciation.

Key Drivers

  1. Record disbursements drive AUM growth.
  2. NPA resolution by Q1 FY'27.
  3. Diversification into new infra sectors.
  4. Strong capital buffer supports expansion.

Key Analyst Discussions

Competitive Environment

  1. Industry faces heightened competition, impacting NIMs and requiring careful portfolio management.
  2. Focusing on smaller infra projects and distributed infrastructure where competition is less intense.
  3. Not directly competing with larger players like IREDA due to cost of funds differences.
  4. Solar panel manufacturing is highly competitive; focus is on value chain like EVs and data centers.

Market Trends & Consumer Behavior

  1. DISCOMs turning profitable creates opportunities, but larger lenders dominate this segment.
  2. Renewable energy projects are a hot topic, with borrowing rates from 8% to 11%.
  3. Market for infrastructure financing is very large, allowing niche players to grow.

Financial Highlights

  1. Sustainable NIM is targeted between 3.5% to 4%, with a portfolio yield around 10.5%.
  2. Expect average cost of funds to decrease by 15-20 basis points over the next 2-3 quarters.
  3. Targeting an interest spread of 150 basis points.
  4. AUM growth of 10-15% is expected by the end of Q4 FY'26.

Product Composition

  1. Diversifying into renewable energy, EVs, CBG, data centers, and oil & natural gas.
  2. Focus on high-quality, 'A' or better rated entities with smaller average ticket sizes.
  3. Expanding into Structured Financing, SME, and FI segments for high-yielding loans.

Strategic Considerations

  1. Danu Wind Park NPA resolution is expected by Q1 FY'27 through multiple approaches.
  2. Capital raise is anticipated in the early part of the next financial year, not this year.
  3. Dividend declaration is expected after the annual results, emphasizing resource conservation.
  4. Liability raising plans are in place, engaging with banks for sanctions in Q4.
  5. Aiming for a 2/3 private sector and 1/3 public sector mix in the medium term (FY'27).