#1FIVE STAR Business Finance Limited Date: November 28, 2022 The National Stock Exchange of India Limited, Exchange Plaza, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051 Symbol: FIVESTAR Sub: BSE Limited Listing department, First floor, PJ Towers, Dalal Street, Fort Mumbai 400 001 Scrip code: 543663 Investor Presentation on the Unaudited Financial Results for the second quarter and half year ended September 30, 2022 Dear Sir/Madam In terms of Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed herewith a copy of the Investor Presentation of the Company on the Unaudited Financial Results for the second quarter and half year ended September 30, 2022. This Investor Presentation is also available on the website of the Company at https://fivestargroup.in/investors/ Kindly take the above on record. For Five-Star Business Finance Limited BASKAR Digitally signed ΑΝ by BASKARAN SHALINI Date: 2022.11.28 SHALINI 17:16:46 +05'30' Shalini Baskaran Company Secretary & Compliance Officer Five-Star Business Finance Limited Registered Office: New No. 27, Old No. 4, Taylor's Road, Kilpauk, Chennai - 600 010. Phone: 044-4610 6200, e-mail: [email protected], Website: www.fivestargroup.in CIN: U65991TN1984PLC010844#2FIVE STAR Business Finance Limited Five-Star Business Finance Limited Investor Presentation Q2 FY2023 STRICTLY PRIVATE AND CONFIDENTIAL#3Safe Harbour FIVE STAR Business Finance Limited This presentation and the accompanying slides (the "Presentation") which have been prepared by Five-Star Business Finance Limited (the "Company") have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, the Presentation is expressly excluded. This presentation contains certain forward looking statements concerning the Company's future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward. looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition (both domestic and international), economic growth in India and abroad, ability to attract and retain highly skilled professionals, time and cost overruns on contracts, our ability to manage our international operations, government policies and action regulations, interest and other fiscal costs generally prevailing in the economy. The Company does not undertake to make any announcement in case any of these forward looking statement become materially incorrect in future or update any forward looking statements made from time to time by or on behalf of the Company. 1#4Presentation Path Section 1 Company Overview Section 2 Executive Summary - Q2FY2023 Section 3 Financial Performance, Asset Quality & ECL - Q2FY2023 Section 4 Liability & ALM FIVE STAR Business Finance Limited 2#5Section 1 Five-Star Business Finance Limited - Overview FIVE STAR Business Finance Limited#6Built to address large market opportunity and achieve scale Registered as NBFC-ND-SI with the Reserve Bank of India 2 decades of lending to Small Business Loan customers FIVE STAR Business Finance Limited Proprietary Underwriting & Collections model fine-tuned over 2 decades of experience Built to take advantage of the large addressable market and credit gap Deep understanding of customer behavior; strong knowledge of the local market and regional dynamics Success and growth of Five-Star are outcomes of the last two decades of operating in the segment Recognized market potential well ahead of time Proven track record to access capital with a well thought strategy; strong investments in professional team 4#7The Five Star Journey 0.3 bn AUM (Mar-10) 1.3 bn AUM (Mar-15) Building the Business Model Strengthening the Business Model 2010 - 2015 Initial Phase 1984 - 2005 2005-2010 5 bn AUM (Mar-17) Setting the base for High Growth 2015-2017 *39 bn AUM (Mar-20) High Growth Phase 2017 Onwards Strong Growth trajectory over the last 38 years of operations FIVE STAR Business Finance Limited *57 bn AUM (Sep-22) 5#8Five-Star Business Finance - At a glance Scale of Operations *57.3bn / 46.4bn AUM in H1FY23/H1FY22 24% growth Y-o-Y 13.7bn/6.9bn Amount Disbursed in H1FY23/H1FY22 Distribution Granular Book Asset Quality Liability Profile FIVE STAR Business Finance Limited Profitability III 352 Number of Branches 100% Secured Loan Book (95% against SORP) 3,662 Business and Collections Team *0.29mn Average ticket size1 % 1.15% H1FY23 90+ DPD (Gross) శ 0.64% H1FY23 90+ DPD (Net) 51 Lender relationships 67.65% CRAR-Sufficient capital 2.8bn /2.2bn PAT in H1FY23/H1FY22 30% growth Y-o-Y % 17.61% Net Interest Margin5 in H1FY23 47,476/26,362 Number of Disbursements in H1FY23/H1FY22 Presence in 8 States across India (focused on expansion) www *40.1bn Net Worth 100% In-house Sourcing & Collections 249,272 Live accounts² 0.51% Q2FY23 Credit Cost to Average Total Assets4 36.9% Average LTV³ (As of September 30, 2022) 1.18% 50.15% Total Restructured Portfolio / Provision Coverage on restructured book Borrowing profile Fixed rate borrowings of 49% 8.68% Return on Total Assets in H1FY23 A+ Long term credit rating by ICRA and CARE 14.66% Return on Avg. Equity³ in H1FY23 Note: 1. Computed by dividing the amount disbursed by the number of loans disbursed for the relevant period; 2. Includes Securitized accounts; 3. Computed by dividing the loan outstanding of a customer divided by the value of the properties mortgaged; 4. Credit Cost to average total assets is computed as the amount of write off + Impairment Loss Allowance divided by the simple average of our monthly total assets as of the last day of the month starting from the last month of the previous period and ending with the last month of the current period, represented as a percentage; 5. Represents the Net Interest Income for the period to the average total assets for the period, represented as a percentage; 6. Calculated as Profit after Tax for the period as a percentage of Average Net Worth for the period. 90+ DPD (Gross) represents Stage 3 assets and 90+ DPD (Net) represents Stage 3 assets reduced by impairment loss allowance on Stage 3 assets. 6#9Transformational Journey Number of Branches Loans to borrowers ('000) Relationship Officers FY15 39 39 FIVE STAR Business Finance Limited >7x >50x FY22 300 218 3,176 5 >40x 59 59 Disbursements (Mn) p.a. 793 30x 24,082(1) Assets Under Management (AUM) (* Mn) 1,315 >35x 50,671 Total Income (Mn) 336 >35x 12,562 Profit After Tax (Mn) 99 >45x 4,535 Networth (Mn) 713 >50x 37,104 Gross NPA 1.8% 1.0% Five Star has grown >35x in AUM between FY15A - FY22A with the same ticket size on the back of a 7x growth in branch network across economic cycles Disbursement numbers shown are for FY20A - highest FY disbursal till date 7#10Key Success Factors FIVE STAR Business Finance Limited Deep Understanding of Customer Segment & Conservative Lending Practices 20 years of operations 2 ATS of 3-5 lakhs Conservative DBR / LTV norms Compelling Economics & Best in Class Return Metrics Yields of ~24%; Spreads of ~12-13% Industry leading ROA at >8% with ROE at -15% Industry Leading Asset Quality Gross Stage 3 of < 1.5% Net Stage 3 of <1% even on a steady-state basis Well Capitalized & Low Leverage Current D/E of ~1x Can target a strong AUM growth trajectory at 3-3.5x leverage Strong Board & Experienced Management Team Board with significant industry experience Experienced Management team of 21 members High Governance Focus Statutory Auditor - S.R.Batliboi & Associates LLP - Internal Auditor – Sundaram & Srinivasan Audit Committee, Risk Management Committee, Nomination & Remuneration Committee, IT Strategy Committee headed by Independent Directors 00 8#11Unique Value Proposition - Product, Underwriting & Collections Strategy FIVE STAR Business Finance Limited Customer centric model underpinned by calibrated sourcing and distribution strategy and robust underwriting and collections practices Customer centric business model = Product ☐ Term Loan with average tenure of 5-7 years ■ Interest rate range of 24%-26% Loans for business, asset creation and other economic purposes ☐ Fully secured by property, ~95% being SORP Comprehensive credit assessment and robust risk management ☑ Sourcing and Underwriting 100% in-house sourcing and processing with focus on service oriented business ■ Assessment based on 3 Cs (Character, Cash flow and Collateral) ■ Two levels of check each in business and in credit; conservative credit policies Assignment of co-applicants - Loans to the family and not individuals Well-diversified Presence Primary States: Tamil Nadu, AP, Telangana, Karnataka, Madhya Pradesh ■ Other States: Maharashtra, Chhattisgarh, UP ■ 352 branches; 6,731 employees Contiguous expansion. Cautious approach to newer states Note: 1. Based on settlement of over 4,000 90+ loans since April 1, 2018 Collections Strong on-ground collection infrastructure and supervisory follow up to cater to new to formal credit customer segment Relatively higher softer delinquencies; consistently low on 90+ DPD ■ <2% IRR loss on settled loans which were 90+ DPD on settlement¹ 9#12Distribution Strategy Geography Total AUM South India Non-South 54,092 3,231 Maharashta % of AUM Chhatisgarh 94% 6% Uttar Pradesh 10 *464 mn Madhya Pradesh 39 2,767 mn FIVE STAR Business Finance Limited Vintage-wise average AUM per branch (as of September 2022) Branch Vintage No of branches Average AUM <=1 year 84 15 1- - 3 years 46 112 3-5 years 112 173 > 5 years 110 287 Total 352 163 State State-wise portfolio break-up No of branches H1FY2023 FY2022 FY2021 FY2020 Telangana Andhra Pradesh Tamil Nadu 105 37% 39% 41% 43% 110 *17,448 mn Andhra Pradesh 110 30% 29% 28% 28% 55 *11,215 mn Telangana 55 20% 19% 18% 19% Karnataka 33 7% 7% 7% 7% Madhya Pradesh 39 5% 5% 4% 3% 33 Karnataka *3,998 mn Others Total 10 1% 1% 1% 1% 352 Notes: As of Sep 30, 2022. Map not to scale. Tamil Nadu 105 21,431 mn # of branches Loan portfolio Strong South India presence coupled with a contiguous expansion strategy 10#13Strategic Technology Focus Robust investments in technology to efficiently manage the lending process, increase productivity and decrease costs Augmentation of team for next level of development Manual underwriting process with minimal technology involvement Manual underwriting System based underwriting through ERP solution 3 ☐ ☐ FIVE STAR Business Finance Limited Significant investments in technology over the last 5 years Moved to FinnOne Neo (ERP solution) with automated workflow and rule engine configuration Moved to a completely paperless underwriting model with all data available on cloud ■ Augmentation of team - 30 IT personnel as on date Hired Vanamali Sridharan as CTO Hired Head of Engineering and Data Sciences to manage the proposed tech developments Ongoing Investments to help build a scalable and efficient model... ...to lead to a reduction in turnaround time from login to loan sanction Utilizing technology for processing of loan applications and analysing credit risks API infrastructure to leverage strengths of third party service providers / fintechs Faster decision making Data analytics and machine learning Robust customer credit scoring model Better customer service and engagement and faster turnaround time 11#14Resilience through Crisis Demonetization 2.22% 3.30% 2.80% 2.52% GST Implementation 2.24% FIVE STAR Business Finance Limited 1.45% Q2FY17 Q3FY17 Q4FY17 (Pre- (Demon (Post- Demon Quarter) Quarter) Demon Quarter) Q1FY18 (Pre- GST Quarter) Q2FY18 (GST Implementation Quarter) Q4FY18 (Post- GST Implementation) 0.75% Covid-19 - Wave 1 Covid-19 - Wave 2 1.37% 1.29% 1.30% 1.68% 1.05% 1.44% 1.27% 1.05% 1.05% Q3FY20 (Pre- Covid Quarter) Q4FY20 (Covid Quarter) Q2FY21 (Moratorium Q3FY21 Q4FY21 Q4FY21 (Post- (Post- Quarter) Covid) Covid) (Post- Q1FY22 (Covid 2) Q2FY22 Q3FY22 Q4FY22 (Post Covid 2) Covid 1) 12#15Consistent Financial Performance over the years¹ FIVE STAR Business Finance Limited Particulars (Mn) FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Operational Information Number of branches 39 64 103 130 173 252 262 299 Loan disbursals 793 1,319 3,830 7,072 14,822 24,087 12,450 17,562 AUM 1,315 1,981 4,834 10,084 21,128 38,922 44,454 50,671 Number of employees 167 293 691 1,290 1,971 3,734 3,938 5,675 Financial Information Income from Operations 336 473 859 2,082 4,089 7,873 10,513 12,562 Interest expenses 104 141 237 578 769 2,156 3,261 2,984 Net Interest Income (NII) 232 332 622 1,504 3,320 5,717 7,252 9,578 Operating Expenses 76 122 286 625 1,060 1,731 2,136 3,081 Loan losses & Provisions 4 7 28 93 76 493 352 455 Profit Before Tax (PBT) 152 203 308 786 2,184 3,493 4,764 6,042 Profit After Tax (PAT) 99 134 194 558 1,567 2,620 3,589 4,535 Total Comprehensive Income 99 134 194 558 1,563 2,608 3,582 4,513 Ratios Cost to Income 34.48% 38.86% 50.48% 47.74% 34.22% 38.90% 34.31% 36.92% Return on Total Assets 7.04% 6.87% 4.22% 5.82% 8.78% 7.31% 6.99% 7.16% Return on Equity 16.65% 16.47% 12.26% 12.97% 15.14% 15.36% 16.85% 13.85% Gross Stage 3 assets / Gross NPA² 1.81% 1.82% 2.47% 1.43% 0.89% 1.37% 1.02% 1.05% Net Stage 3 assets / Net NPA³ 1.48% 1.52% 2.07% 0.94% 0.68% 1.13% 0.83% 0.68% Provision Coverage Ratio - overall AUM 0.57% 0.54% 0.81% 0.97% 0.80% 1.58% 1.95% 2.03% Provision Coverage Ratio - Stage 3 18.40% 16.34% 16.24% 33.89% 22.99% 17.67% 17.92% 34.91% CRAR Debt/Equity ratio 52.17% 1.24 39.14% 43.78% 58.82% 64.09% 52.94% 58.86% 75.20% 1.43 2.04 0.92 0.70 1.22 1.48 0.69 Notes: 1. Financials from FY2019 are as per Ind-AS and earlier years as per I-GAAP; 2. Gross Stage 3 Assets / Gross NPA represents loans which are more than 180 days past due till FY2016 and loans which are more than 90 days past due thereafter, as a percentage of the overall loan portfolio; 3. Net Stage 3 Assets / Net NPA denotes Gross Stage 3 assets / Gross NPA reduced by impairment allowance on such loans, represented as a percentage 13#16Strong ESG Focus Sustainable Business Model Built Around Societal Impact 1₹ Financial Inclusion Caters to the underserved market of small business loans Meets demand which is majorly catered by informal sources ■ Employment opportunities in semi-urban and rural areas Focus on hiring local talent Majority of AUM from LIG 66% 72% 74% 58% 47% FY19 FY20 FY21 FY22 H1FY23 AUM with LIG Customers (%) Provides business loans Lower interest rates Economic upliftment Corporate Social Responsibility CSR Committee is focused on improving education, health and livelihood FIVE STAR Business Finance Limited 14#17Strong ESG Focus Social Impact achieved through... Branch Presence Customers ignored by banks/larger Fls . Lending for business purposes • Significant branch presence in Tier 3 to Tier 6 towns . Low income borrowers . Customers with strong incomes from everyday services but lacking the documentary evidence of such incomes Fully Collateralised loan Predominant portion of lending towards business purposes (income generation) Displace unorganised institutions (money lenders) – First time borrowers to formal lending - Tier 6 - Population < 50K; Tier 5 - Population 50K - 1L; Tier 4 - Population 1 - 2L; Tier 3 - Population 2 - 10L; Tier 2 - Population 10 - 50L; Tier 1 - Population >50L FIVE STAR Business Finance Limited Significant Branch presence in Tier 3 to Tier 6 towns - semi-urban and fast-growing rural geographies 1% 2% 13% 23% 38% 22% ■ Tier1 ■ Tier2 ■ Tier3 ■ Tier4 ■ Tier5 ■ Tier6 15#18Strong Governance framework Board of Directors Committees Chaired by Independent Directors Audit Committee Risk Management Committee Nomination & Remuneration Committee IT Strategy Committee Stakeholder Relationship Committee Other Committees Business Resource Committee Corporate Responsibility Committee FIVE STAR Business Finance Limited 4 Independent Directors (Incl 1 Woman) 1 Executive Director 3 Non-Executive Directors (2 Nominees) Management Team Asset Liability Committee Credit Committee Grievance Redressal Committee 16#19Distinguished Board of Directors FIVE STAR Business Finance Limited Lakshmipathy Deenadayalan Chairman & Managing Director Anand Raghavan Independent Director Chair Audit Committee TT Srinivasaraghavan Independent Director Chair - Risk Management Committee Bhama Krishnamurthy Independent Director Chair Nomination & Remuneration Committee Ramkumar Ramamoorthy Independent Director Chair - IT Strategy Committee Vikram Vaidyanathan Non-Executive Director GV Ravishankar Non-Executive Director Trilokchand Vasan Non-Executive Director 17#20Experienced Management team Rangarajan Krishnan Chief Executive Officer Srikanth Gopalakrishnan Chief Financial Officer Vishnuram Jagannathan Chief Operating Officer FIVE STAR Business Finance Limited Parthasarathy Srinivasan Chief Credit Officer Sathya Ganesh Chief Business Officer Vanamali Sridharan Jayaraman Sankaran Chief Technology Officer Chief Risk Officer Ramesh Kannah Chief Legal Officer Naveen Raj Chief Audit Officer Prashanth Sreenivasan Chief Treasury Officer 18#21Section 2 Executive Summary - Q2FY2023 FIVE STAR Business Finance Limited#22• Executive Summary Five Star witnessed a strong first half of FY2023 across Growth, Profitability and Quality. Business & Disbursal momentum back to pre-COVID levels and collections continue to be robust. Y-o-Y growth of 24% on AUM and Gross Stage 3 assets of 1.15% • • AUM Profit After Tax Net Stage 3 assets *57,324 Mn 24% growth Y-o-Y *2,836 Mn 30% growth Y-o-Y 0.64% VS 1.19% in Sep'21 Total revenues H1FY23 Provisions FIVE STAR Business Finance Limited Cost to Income H1FY23 Return on Assets H1FY23 ₹7,009 Mn 15% growth Y-o-Y ₹1,016 Mn 7% higher provisions Y-o-Y 34.11% VS 35.34% in H1FY22 8.68% VS 6.91% in H1FY22 20 20#23Balance Sheet indicators FIVE STAR Business Finance Limited All amounts in Mn Disbursals AUM Net Worth 16% 24% 127% 8,028 40,076 57,324 38,570 52,965 5,684 34,533 46,393 8% 3,533 4% 41% Borrowings Expected Credit Loss Liquidity 7% 28,543 16,563 25,203 25,231 1,016 979 953 10,770 4% 7,949 Q2FY22 Q1FY23 Q2FY23 21#24P&L indicators Income 17% Interest expense FIVE STAR Business Finance Limited Other expenses (39%) All amounts in Mn 23% 3,619 3,391 996 788 885 3,085 648 609 717 7% 6% (13%) 35 Credit Cost -4 PBT PAT 25% 22% 85 55 1,862 1,928 1,394 1,442 1,546 1,178 4% 3% Q2FY22 Q1FY23 Q2FY23 22#25Financial Summary 1. Net AUM growth of 4,359 Mn in Q2FY23 as against ₹599 Mn in Q2FY22 2. AUM was up 24% at 57,324 Mn as against 46,393 Mn as of 30 September 2021 3. Disbursements during the quarter was at *8,028 Mn as against ₹3,533 Mn during Q2FY22 4. Active loans almost touched 0.25 Mn as against 0.19 Mn as of 30 September 2021 FIVE STAR Business Finance Limited 5. The Company added 41 branches during the quarter. Total branch count stood at 352 as against 268 branches as of 30 September 2021 6. Total Headcount stood at 6,731 as against 4,306 as of 30 September 2021 7. The Company continued to have a robust collection efficiency of 100.1% during the quarter 8. During the first half of the year, the company has raised incremental debt of ₹6,400 Mn, at a weighted average rate of interest of 8.33% (all-inclusive cost of 8.66%1 on fresh borrowings raised during the quarter). Liquidity buffer as of 30 September 2022 stood at about 7,950 Mn. 9. Gross & Net Stage 3 assets stood at 1.15% and 0.64% respectively as of 30 September 2022 as against 1.44% and 1.19% as of 30 September 2021 10. Overall stage 2 assets stood at 7,147 Mn (12.47%) as of 30 September 2022 as against 7,524 Mn (16.22%) as of 30 September 2021 and 7,730 Mn (14.59%) as of 30 June 2022. 11. The Provision coverage on Stage 3 assets stood at 44.27% and the provision coverage on the overall portfolio stood at 1.77% 12. Post tax profit grew by 22% to 1,442 Mn in Q2 FY23 as compared to ₹1,178 Mn in Q2 FY22 13. Capital adequacy remained high at 67.65% as of 30 September 2022 Notes: 1. Includes processing fee and other ancillary costs 23#26Section 3 Asset Quality & ECL FIVE STAR Business Finance Limited#27Asset quality indicators Collections Efficiency (%) 102.0 100.196.6 99.2 95.6 101.5 98.2 93.9 92.6 93.3 Sep'22 Jun'22 Mar'22 Dec'21 30+ (%) FIVE STAR Business Finance Limited 19.36 17.66 16.78 15.71 13.62 Sep'21 Sep'22 Jun'22 Mar'22 Dec'21 Sep'21 Total amount of EMI received during the month (including arrears of previous months) divided by EMI demand for the current month Total EMI amount received during the month, restricted to a max of 1 EMI per loan divided by EMI demand for the current month 90+ Gross (%) 1.44 1.27 1.15 1.12 1.05 90+ Net (%) 1.19 0.83 0.64 0.68 0.68 Sep'22 Jun'22 Mar'22 Dec'21 Sep'21 Sep'22 Jun'22 Mar'22 Dec'21 Sep'21 25 45#28Asset quality indicators Amount in Mn Bucket As at Sep 2022 As at Jun 2022 As at Sep 2021 AUM % AUM AUM % AUM AUM % AUM Current (Stage-1) 44,888 78.31% 39,567 74.70% 31,084 67.00% 1-30 (Stage-1) 4,630 8.08% 5,077 9.59% 7,118 15.34% 31-60 (Stage-2) 3,575 6.24% 4,071 7.69% 4,151 8.95% 61-90 (Stage-2) 3,571 6.23% 3,659 6.91% 3,373 7.27% 90+ (Stage-3) 660 1.15% 591 1.12% 667 1.44% Total 57,324 52,965 46,393 Stage 1 Assets 49,518 86.38% 44,644 84.29% 38,202 82.34% Stage 2 Assets 7,147 12.47% 7.730 14.59% 7,524 16.22% Stage 3 Assets 660 1.15% 591 1.12% 667 1.44% FIVE STAR Business Finance Limited Improvement across buckets across quarters seen post the deterioration that happened consequent to second wave of Covid 26#29Asset quality indicators FIVE STAR Business Finance Limited Amount in Mn As of September 30, 2022 Stage 1 Stage 2 Stage 3 Total Loans Outstanding (Gross) 49,518 7,147 660 57,324 ECL Provision 184 540 292 1,016 Loans Outstanding (Net) 49,334 6,607 368 56,308 ECL Provision % 0.37% 7.56% 44.27% 1.77% As of June 30, 2022 Stage 1 Stage 2 Stage 3 Total Loans Outstanding (Gross) 44,644 7,730 591 52,965 ECL Provision 142 605 232 979 Loans Outstanding (Net) 44,502 7,125 359 51,986 ECL Provision % 0.32% 7.82% 39.22% 1.85% As of September 30, 2021 Stage 1 Stage 2 Stage 3 Total Loans Outstanding (Gross) 38,202 7,524 667 46,393 ECL Provision 164 670 119 953 Loans Outstanding (Net) 38,038 6,854 548 45,440 ECL Provision % 0.43% 8.91% 17.82% 2.05% 27#30Section 4 Financial Performance - Q2FY2023 FIVE STAR Business Finance Limited#31Balance Sheet Particulars (Mn) FIVE STAR Business Finance Limited Q2FY2023 Q2FY2022 Q1FY2023 Assets Cash & Cash equivalents 3,438 8,498 4,096 Bank balances other than cash & cash equivalents 2,299 4,659 3,036 Loans¹ 57,635 46,444 54,543 Investments 1,644 3,237 1,892 Other financial assets 226 49 191 Non-Financial Assets 1,035 860 925 Total Assets 66,277 63,746 64,684 Liabilities & Equity Trade Payables 134 82 109 Debt Securities 7,457 12,146 9.474 Borrowings other than Debt Securities 17,774 16,397 15,729 Other Financial Liabilities 637 192 547 Non-Financial Liabilities 198 396 255 Total Equity 40,076 34,533 38,570 Total Liabilities 66,277 63,746 64,683 Note: 1. Loans include Inter-Corporate deposits placed as Investments with HDFC and is net of Expected Credit Loss on the Loan portfolio 29 29#32Quarterly & Half yearly Profit & Loss Statement FIVE STAR Business Finance Limited Particulars (Mn) Loan Portfolio 46,393 52,965 24% 8% Q2FY2023 Q2FY2022 Q1FY2023 Y-o-Y Q-o-Q H1FY2023 H1FY2022 H2FY2022 Y-o-Y H-0-H 57,324 57,324 46,393 52,965 24% 8% Interest Income 3,573 2,943 3,352 6,925 5,864 6,174 Net Gain on Fair value changes 14 71 15 29 132 77 Fee & Other income 31 68 23 54 117 199 Total Income 3,619 3,085 3,391 17% 7% 7,009 6,112 6,449 15% 9% Interest Expenses 609 788 648 1,257 1,652 1,354 Net Interest Income 3,010 2,297 2,743 31% 10% 5,752 4,460 5,095 29% 13% Operating Expenses 996 717 885 1,881 1,357 1,701 Loan losses & Provisions 85 35 (4) 81 219 236 Profit before Tax (PBT) 1,928 1,546 1,862 25% 4% 3,790 2,884 3,158 31% 20% Profit after Tax (PAT) 1,442 1,178 1,394 22% 3% 2,836 2,175 2,360 30% 20% Other Comprehensive Income (19) (10) (7) (27) (15) (8) Total Comprehensive Income 1,422 1,168 1,387 22% 3% 2,809 2,161 2,352 30% 19% Earnings Per Share (Basic) 1 4.94 4.22 4.79 Earnings Per Share (Diluted) 1 4.87 4.16 4.74 Note: 1. EPS for the quarters is not annualized 9.73 7.96 8.13 9.61 7.85 8.07 30 30#33RoA Tree FIVE STAR Business Finance Limited Particulars Q2FY2023 Q2FY2022 Q1FY2023 H1FY2023 H1FY2022 H2FY2022 Interest Income (as a % of average portfolio) 24.19% 24.00% 24.15% 24.15% 24.14% 24.00% Interest Expenses (as a % of average borrowings) 10.48% 10.50% 10.53% 10.56% 10.63% 10.39% Net Interest Income % 13.71% 13.50% 13.62% 13.60% 13.51% 13.62% Total Income % (as a % of average total assets) 21.88% 19.29% 20.98% 21.45% 19.42% 20.18% Interest Expenses (as a % of average total assets) 3.68% 4.93% 4.01% 3.85% 5.25% 4.24% Net Interest Margin % 18.20% 14.36% 16.97% 17.61% 14.17% 15.94% Operating Expenses (as a % of average total assets) 6.02% 4.48% 5.47% 5.76% 4.31% 5.32% Loan losses & Provisions (as a % of average total assets) 0.51% 0.22% (0.02%) 0.25% 0.70% 0.74% Profit before Tax (PBT) % 11.66% 9.67% 11.52% 11.60% 9.17% 9.88% Tax % 2.94% 2.30% 2.89% 2.92% 2.25% 2.50% Profit after Tax (PAT) / Return on Total Assets 8.72% 7.37% 8.62% 8.68% 6.91% 7.38% Debt/Equity 0.63 0.83 0.65 0.63 0.83 0.69 Return on Equity 14.55% 14.62% 14.78% 14.66% 14.53% 13.20% Cost to income ratio 35.91% 32.74% 32.12% 34.11% 35.34% 38.02% 31#34Section 5 Liability & ALM FIVE STAR Business Finance Limited#35Diversified and Cost-Effective Funding Profile Number of lenders in each category Well diversified borrowing mix 54 53 51 11 11 13 11 7 14 42 6 23 24 30 24 16 20 20 12 16 1 1 2 9 7 8 4 9 6 7 4 3 1 2 18 2 15 12 14 12 7 10 FY15A FY16A FY17A FY18A FY19A FY20A Private Banks ■Public Banks ■ NBFCs FY21A Others Long Term Credit Rating A+ from both ICRA and CARE NIL Commercial Paper exposure Short Term Credit Rating A1+ from CARE FY22A 20 20 22 H1FY23 FIVE STAR Business Finance Limited Increased number of lending relationships from 30 + FY19 to 51 as of Sep 2022 Deepened relationships in the PSU and private bank category Lenders to the Company Select Public Sector Banks State Bank of India The Company does not use Short term borrowing to fund its long term assets Select Private Sector Banks Select Other Institutions ७ पंजाब नैशनल बैंक punjab national bank बैंक ऑफ़ बड़ौदा Bank of Baroda Union Bank of ind बैंक ऑफ़ इंडिया Bank of India Bank of Maharashtra RBL BANK kotak apno ka bank Kotak Mahindra Bank IndusInd Bank Bandhan Bank HDFC BANK ICICI Bank B BAJAJ Swedfund FINSERV ADITYA BIRLA HSBC DCB AU AXIS BANK YES BANK sf AU FINANCE SMALL BANK SUNDARAM FINANCE Chola Enter a better life TATA CAPITAL HeroFinCorp. Finance Made Easy responsAbility We only do what's right for you FINANCE 33 33#36Diversified and Cost-Effective Funding Profile Well diversified borrowing mix 100% 3% 14% 3% 16% 0% 23% 80% 30% 60% 38% 43% 4% 40% 6% 50% 20% 37% 8% 27% 0% Sep'22 Jun'22 Sep'21 ■Bank Term Loans Other Term Loans ■NCD Securitisation ■ ECB Cost of incremental borrowings 11.37% 10.80% 9.68% Cost of funds on the book FIVE STAR Business Finance Limited (156bps) 12.07% 11.48% 8.51% 8.33% 11.06% 10.51% 10.56% 23,618 6,364 17,817 3,154 FY19 FY20 FY21 Incremental Borrowings (* Mn) 1 FY22 6,400 H1 FY23 Incremental Cost of Borrowings 2 FY19 FY20 FY21 FY22 H1 FY23 Average Cost of Borrowings Note: 1.. Incremental borrowings during the period; 2. Represents weighted average rate of interest on fresh borrowings in the relevant period, weights being availed amount of each borrowing during the period. 34#37ALM Position as of Sep'22 - Cumulative FIVE STAR Business Finance Limited Particulars (* Mn) 1-7 D 8-14 D 15-30 D 1-2 M 2-3 M 3-6 M 6M-1Y 1-3 Y 3-5 Y >5 Y Opening Liquidity / Mismatch 8,707 Add: Inflows from advances 1 0 1,5021 675 685 2,234 5,011 20,753 19,250 6,922 Less: Outflows on borrowings 86 46 409 569 2,368 2,542 7,125 8,186 3,032 369 Add: Other inflows 181 0 22 65 2 15 5 21 500 1,906 Less: Other outflows 335 4 220 17 236 140 390 780 230 41,370 Closing balance / Cumulative mismatch 8,468 8,418 9,312 9,466 7,549 7,115 4,615 16,423 32,912 No cumulative mismatch in any of the time buckets The Company does not use short-term borrowings to fund its long-term assets, despite possible pricing benefits Notes: 1. Includes Interest accrued not due on loans; 35#38Strong Liquidity Position as of Sep'22 Amount in Mn Liquidity buffer as of Sep 2022 Unencumbered cash & cash equivalents 7,950 Unavailed sanction from banks / Fls 2,300 Total Liquidity 10,250 Projected Cashflow Schedule Q3FY23 Q4FY23 Q1FY24 Q2FY24 Opening Liquidity 10,250 10,806 11,651 10,121 Add: Principal collections & internal accruals 4,035 3,387 3.382 3,283 Less: Debt repayments (principal & interest) 3,457 2,542 4,912 2,213 Closing Liquidity 10,806 11,651 10,121 11,191 FIVE STAR Business Finance Limited 36#39FIVE STAR Business Finance Limited Thank You FIVE STAR Business Finance Limited 37