PFS - PTC India Financial Services Limited Share Price

The management of PTC India Financial Services outlined a cautiously optimistic outlook focused on resolving legacy issues, driving growth, and strengthening foundations. Key points include:

1. Resolution of NPAs: Progress on stressed assets (NSL, Vento, IL&FS Tamil Nadu) with resolutions expected by March/Jun 2025, reducing gross NPAs by ~75% and releasing provisions, improving cash flows and profitability.

2. Business Growth: Targeting disbursements of Rs.800"“1,000 crores quarterly in FY26, aiming for Rs.3,500"“4,000 crores annual disbursements. Sanctions pipeline of Rs.500"“600 crores in Q4 FY25, with AUM growth to Rs.5,800"“6,000 crores by FY25-end.

3. Operational Transformation: Restructuring for customer-centric operations (separating business, credit, and operations), IT automation, and data warehousing to enhance efficiency and controls.

4. Financial Metrics: Focus on maintaining net interest margin (NIM) above 3% and interest spread of 2"“2.5%. Managing cost-to-income ratio below 15% through scale.

5. Funding & Capital: Diversifying liability mix (banks, institutions, bonds) and reducing capital adequacy (currently ~50%) via increased lending. Secured in-principle approval for Rs.500 crore funding, with plans to broaden domestic/international sources.

6. ESG & Sustainability: Developing an ESG roadmap to position as a green finance leader, targeting international investors.

7. Talent & Governance: Enhancing employee engagement, leadership restructuring, and appointing a permanent CFO by Mar/Apr 2025.

The management emphasized foundational strengthening in FY25, with visible growth and improved asset quality expected from Q4 FY25 onward.

1. What efforts is the Company taking to augment project pipelines, and what are the expected figures for Q4 FY25? How will the high capital adequacy ratio be addressed?
Answer: The Company aims to double Q3's disbursement in Q4, targeting significant growth. A Rs.500 crore in-principle lending approval was secured, which will diversify funding sources and reduce capital adequacy via increased lending.

2. When will the Chief Financial Officer (CFO) and Chief Compliance Officer (CCO) be appointed?
Answer: The CFO appointment awaits RBI approval, expected in 2"“3 weeks, with onboarding by March/April 2025. The CCO role will be filled by March 31, 2025, following organizational restructuring.

3. What growth expectations exist for FY26, and what rates are anticipated for new lending lines?
Answer: FY26 targets include Rs.3,500"“4,000 crore disbursements (averaging Rs.800"“1,000 crore quarterly). Lending rates depend on market conditions, but focus remains on maintaining 2"“2.5% interest spreads and expanding the loan book.

4. How will net interest margins (NIMs) and credit ratings evolve?
Answer: NIMs may dip as leverage increases but will stabilize with portfolio growth. Credit rating upgrades depend on resolving asset quality, business expansion, and resource diversification, with progress expected by mid-2025.

5. Is the 4.46% NIM sustainable? What is the target cost-to-income ratio?
Answer: NIMs will likely decline as debt financing grows, but interest spreads (2"“2.5%) and ROA (2.5"“2.75%) will remain priorities. Cost-to-income aims to stabilize near 15% as business scales.

6. How does funding diversification (banks vs. financial institutions) impact borrowing costs?
Answer: Transitioning to financial institutions may raise costs slightly, but diversification mitigates concentration risk. Asset-side strategies (smaller tickets, structured products) and non-infrastructure lending (25% cap) will offset margin pressures.

7. Is foreign institutional funding being explored?
Answer: Past attempts are being revisited, but near-term focus is on domestic diversification (banks, mutual funds, insurers). Foreign funding is a longer-term goal post-2027, contingent on ESG alignment and financial stability.