Transaction Completion and Capital Infusion

  • IHC's strategic investment of $1 billion completed with share allotment on March 31, 2026
  • Current equity ownership: 28.5% by IHC
  • Expected ownership post-warrant conversion: 43.5% (within 18 months)
  • Funds received: INR5,652 crores ($592 million) from equity shares and 25% upfront warrant payment
  • Balance to be received: INR3,200 crores ($335 million) upon warrant conversion
  • Mr. Alwyn Crasta (Group CFO, IHC) appointed as Nominee Director on May 15, 2026

Financial Performance and Targets

FY27 Targets:

  • Disbursements: INR30,000 crores
  • Profit After Tax: INR1,400 crores
  • Dividend Payout: Minimum 25%, targeting 40%
  • Net Interest Margin: 3.5% (starting point)
  • Cost-to-Income Ratio: Target to reduce from current 50% to 26% by FY30
  • ROA: 1.8% in FY27, increasing to 4.4% by FY29-30
  • ROE: Targeting high-teens

Balance Sheet Position:

  • Opening AUM: INR53,160 crores with 0% gross and net NPA
  • Net Worth: INR19,000 crores
  • Capital Adequacy: 20.2% currently, proforma 29% post-warrant conversion
  • Gearing Cap: 3.5x to 4x
  • Liquidity Principle: Higher of 6 months repayments or 10-15% of borrowings

Rating Agency Upgrades

All three domestic rating agencies upgraded within 50 days of IHC investment:

  • CRISIL: Upgrade on April 9, 2026
  • CARE: 2-notch upgrade on May 12, 2026
  • ICRA: Upgrade on May 20, 2026 (day of call)
  • Current consensus rating: AA+
  • Bond appreciation: Domestic bonds +100 bps, International bonds +250 bps

Strategic Growth Plan

Product Strategy:

  • 80% of disbursements to be retail
  • 60% secured lending, 20% unsecured/semi-secured
  • Mortgage products: Prime mass market (8.5-10% yield) for sale to banks; Affordable portion (10-13% yield) to hold
  • Business loans: Secured loans (9.5-11% yield) for sale; Affordable micro-LAP (11-13.5% yield) to hold
  • CRE project loans: 10-15% stake in co-origination with credit funds (pari-passu, no guarantees)
  • New products: Gold loans (FY27), loans against securities (FY27), unsecured products (FY28)

Expansion Targets:

  • Workforce: Current to 20,000 by FY30 (8,000 by end-FY27)
  • Branch network: Current 240 to 1,600 by FY30
  • Products: Current to 15+ by FY30
  • Borrower base: 10x growth
  • Book value per share: From INR160 to over INR200

AI and Technology Transformation

  • 37 use cases identified for implementation
  • Target outcomes:
  • 30% increase in agent productivity
  • Loan turnaround time reduction from 5-7 days to 2-3 days
  • Improved fraud detection rates
  • Enhanced customer experience and service responsiveness
  • Operational efficiency improvements
  • Better risk management and early warning systems
  • Improved governance through AI monitoring tools

Operational History and Experience

  • Demonstrated book with INR3.6 lakh crores historical disbursements
  • Annualized credit cost: 1.9% for historical book
  • Successfully serviced INR1.3 lakh crores net debt reduction since September 2018
  • Asset-light model: INR1.05 lakh crores ($11 billion) disbursed and sold down across 24 bank/NBFC relationships

Management Commentary

IHC Perspective (Peter Abraam):

  • IHC operates across 100+ countries with 1,300 subsidiaries
  • Four key sectors: technology, infrastructure, financial services, consumer
  • Long-term value creation approach
  • India represents strategic growth market with strong fundamentals

Avalora Perspective (Dalia Khorshid):

  • Avalora consolidates IHC's non-banking FI platforms across Asia, Middle East, Africa, CEE, and Latin America
  • Focus on liability management and rating upgrades
  • Technology and AI integration already underway
  • Hands-on operational involvement with Sammaan management

Q&A Highlights

Cost of Funds Strategy:

  • 90% borrowings onshore
  • Marginal cost of funds expected to decline by 160 bps from rating upgrades
  • Target: Move from AA to AAA rating trajectory
  • Existing borrowings mostly 3-4 year maturity; incremental borrowings at lower cost

Growth Execution:

  • FY27-28: 80% disbursements in existing products (mortgages)
  • FY30: 50% mortgages, 50% other products
  • Physical distribution investment: Gold loan branches require ~INR20 lakh setup cost
  • Workforce expansion funded through operating earnings

Competitive Positioning:

  • Acknowledged competitive AAA-rated NBFC landscape
  • Differentiators: Cost of funds advantage, liability management expertise, cycle experience
  • Target disbursement scale: INR72,000 crores by FY29 (INR6,000 crores monthly)

Financial Metrics Clarification:

  • ROA projection correction: 4.4% in FY29 and FY30 (not 8% as initially shown)
  • NIM expansion drivers: Sold book spreads, equity infusion benefits, cost of funds reduction
  • Return on managed assets: From 1.5% to 3% target

Recovery Expectations:

  • INR7,000 crores recoveries from provided amounts baked into projections
  • Technical write-offs enable management focus on growth