Con call Notes (Left after 1 hr due to professional commitments)
- Current volume of CP issues is 30% of normal
- CP used only for Treasury assets and Loan against Shares. We don’t use CP for long term Assets
- Growth in these assets will come when normalcy will resume. Till then growth may not be there
- 50% lower volume in CP will cause 40-50cr reduction in Annual profit of Edelweiss
On RE book
- RE book built slowly and steadily over 10 years
- Various investors have done due diligence on this book and have co-invested via Fund Route
- Housing market outlook: Last 5 years- Inventories have come down, prices have fallen. Most purchases are from end users and not investors. There will be demand for housing as long as India’s growth continues.
- Last mile funding may be needed for some projects
- Major risk in housing projects is completion. Once completion is over, there is comfort on repayment as they are self liquidating assets
- Funding is done at SPV level (project level)
- With RERA, diversion of funds into another project is a criminal offence and this gives us extra comfort
- All RE projects are under construction projects : No LRD
- When asked about naming top customers : Management has a policy of not giving names as it would not be fair and also as investors, just the name does not tell much about the project, one has to take into account other things also
- Management has a cap per Wholesale customer - Cannot exceed 1% of Total Loan Book
- Geographically, Mumbai MMR and Pune forms around one third of total RE loan book, NCR is around 25-30% and rest is in Chennai, Bangalore and Hyderabad
Seeing good recoveries. In H1 FY19, ARC has recovered 2000cr, in H2, recoveries can be 10,000-12,000cr.
We will deploy more funds out of these inflows
We have also invested in RE projects through ARC and capable of doing more. May create focused RE fund for distressed RE assets.
On asked about profits from specific transaction of Essar : Management has policy of not disclosing such info.
LAS portfolio - around 75% is Financing against ESOPs for HNI executives. Balance 25% is margin finance. Average LTV is 50%
after 21st Sep, incremental borrowing cost is 40-50 bps higher
Can pass on increased cost on assets so that NIMs are maintained