Concall Summary: CSL Finance Ltd Q1FY21

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Business updates from CSL Finance Concall Summary

  • The provisioning is not specific to any particular account but in general due to the challenges being faced by the sector
  • The management is shifting focus in SME segment towards the smaller loan segment
  • The SME segment includes the secured and unsecured book in which the unsecured book is only advanced to T+12 schools and is capped at Rs 5 lakhs
  • During March-May almost 57% of customers asked for a moratorium which has now come down to 24%
  • One area where challenge exists is the school vertical because cash flows have come down to zero
  • As on 31st March, the Gross NPA stands at 2.4%
  • The management has not availed any moratorium from its lenders and has repaid around Rs 21 crores during this period including some high-cost loans were pre-paid in June


  • Bamboo Capital
  • Prudent Value Partners
  • Turtle Capital
  • Antique Stock Broking
  • Credence Wealth


  • The loans under moratorium have been coming down and excluding for school loans it is down to 10% from 57% earlier
  • For retail loans, it will take another 3-4 months to get better clarity on business
  • The loan accounts are behaving well and collections in the last 3 months have been better than expectations
  • Most of the accounts that are funded are in the last mile and require only fit-out work to be completed
  • The company operates in affordable housing segments where ticket size is Rs 20 lakhs for housing. The collection is a challenge but doesn’t see any problem of loans turning bad
  • The rate of the NCD through which the company is raising Rs 30 crores from SBI is at 10.2% which is pretty low for a BBB rated company
  • The company will continue to charge interest on an accrued basis to its customers who have availed of the moratorium
  • In the wholesale book, the asset quality is very good and LTV amounts are also very strong
  • The company has funded schools in Tier 2-4 cities where online facilities are not available and cash flows have come down to zero hence that business is facing a challenge
  • The management has taken cost-cutting measures like consolidation of branches and also employees have taken salary cuts along with management
  • Currently not being too aggressive with new business and expecting AUM growth of 10-15% for the current fiscal
  • In the current market getting good rates on loans from lenders and thus seeing improved ROI’s on loans that can be advanced. The management is being proactive in raising funds and readying itself for growth if an opportunity exists in future
  • Since house prices have been stagnant and home loan prices have fallen considerable expecting demand to come into the segment
  • The thought process is not to venture into a segment where larger companies and fintech players are present because on cost perspective it is not feasible
  • The management will want to remain in the housing segment because of extensive domain knowledge on their part
  • The LAP segment is not a focus area and there are only 6 customers in this segment and considering the size of this book not extremely concerned because of confidence in repayment by customers
  • This year we have chosen to go slow on growth and survivability is the first priority and not looking at rapid growth and in the next financial year will be looking at better growth
  • There has been tremendous pressure in the informal segment due to business being shut down and migrant labors returning and thus next 3-6 months are very important and management is very cautious currently
  • In the rural segment, the company services in the semi-rural segment like small kiranas, dairy segment, small dhabas, etc
  • The extraordinary performance of the rural segment has been due to a very good crop and due to the prompt response by the government in procuring crops from farmers
  • In the retail segment don’t see a challenge of lower rates but in the wholesale segment seeing some pressure on yields due to the low rate environment
  • Barring a few accounts, we have collected 100% of the due amount
  • In the SME segment, there are two segments ie micro SME loans where 95% of the due amount has been collected while in the school loan account around 55% of the due amount has been collected during June & July
  • The management will want to wait till August when the moratorium period will end to see what is the repayment capacity of the customer
  • On part of the company, the employees are maintaining a relationship with customers so that when the moratorium ends the company will find it easier to get repayments
  • The company has not advanced any top-ups to customers during this period
  • In 80% of the book the company is the sole lender
Also Read on FinMedium:  Polymedicure Q4FY21 Concall Summary

Image source: Company website

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Karan Sharma

Karan Sharma

The Concall Summary Guy | CFA | Investor
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