### **Overview** IndoStar Capital Finance Limited (IndoStar) is a **systemically important, non-deposit-taking NBFC** registered with the Reserve Bank of India. Co-promoted by global institutional investors **Brookfield (56.2%)** and **Everstone Group (17.1%)**, IndoStar has transformed from a corporate lender into a **professionally managed, retail-focused financial institution**. As of FY25, **95% of its portfolio is retail**, driven by two core verticals: **Vehicle Finance** and **Micro Loan Against Property (Micro LAP)**. --- ### **Strategic Transformation: IndoStar 2.0** IndoStar is undergoing a multi-year strategic evolution known as **IndoStar 2.0**, aimed at becoming a **lean, efficient, agile, and profitable (Project LEAP)**, technology-driven, multi-product retail NBFC. The transformation is built on four key pillars: - **Retail diversification** beyond commercial vehicles - **Digital-first lending model** with end-to-end automation - **Operational efficiency and cost optimization** - **Focus on high-yielding, secured retail products** Project LEAP, launched in March 2025, institutionalizes process discipline and data-driven execution across the organization. --- ### **Core Business Segments & Portfolio Diversification** #### **1. Vehicle Finance (Primary Segment)** - **Assets Under Management (AUM):** ₹7,963 crore as of March 2025, with M&HCVs accounting for ₹7,401 crore. - **Disbursement Mix:** 97% of total disbursements, but undergoing strategic diversification. - **Expansion Beyond M&HCVs:** Includes **passenger vehicles, farm equipment (tractors), construction machinery, and small commercial vehicles (SCVs/LCVs)**. - **Used Vehicle Focus:** 99% of CV disbursements are for **used vehicles**, targeting **small road transport operators (SRTOs)**, first-time owners, and rural entrepreneurs. - **Geographic Reach:** Operates in **23 states**, with over **70% of branches in Tier 3–5 towns**, leveraging **first-mover advantage** in underserved markets. - **Market Drivers:** Vehicle scrappage policy, rising new vehicle prices, BS-VI transition, and improved asset longevity (vehicles up to 12 years old financed). #### **2. Micro Loan Against Property (Micro LAP) – Strategic Growth Engine** - **Product Launch:** April 2025 in Tamil Nadu, currently a small but fast-growing segment. - **Current AUM (Q2 FY26):** ₹101 crore, up from ₹50–52 crore in FY25. - **Target AUM:** **₹300 crore by FY26**, with **CARE Edge projecting >25% growth**. - **Average Ticket Size:** ₹3–6 lakhs (median: ₹6 lakh), **LTV:** ~35.5%, **Tenure:** 5–7 years. - **Yield:** ~22%, with **99% residential collateral**, predominantly self-occupied. - **Target Customers:** **Self-employed micro-entrepreneurs, small traders, and service providers** in **Tier 3–4 markets**, with a **CRIF score of 675+**. - **Business Model:** **100% direct origination**, no third-party DSAs; dedicated team of **300+ employees**. - **Technology:** Fully digital, paperless platform using shared **Loan Origination System (LOS)** with no incremental tech cost. --- ### **Growth Strategy & Execution** #### **Retail-Centric & Multi-Product Ambition** - **Disbursement Diversification:** Non-commercial vehicle loans (farm, passenger, construction) contributed **41% of FY25 disbursements (₹5,250 crore)**. - **Geographic Expansion:** Micro LAP is being rolled out from **Tamil Nadu to Andhra Pradesh and Telangana** using **existing 450-branch network**, avoiding greenfield costs. - **Branch Scaling:** Gradually scaling Micro LAP from **12 to all 450 branches** over next three quarters. - **Branch Model Evolution:** - **Micro-branches:** 48 converted into full-fledged branches. - Target of **100+ operational locations** to support retail lending growth despite NBFC sector softness. #### **Funding & Cost of Capital** - **Cost of Funds:** Reduced by **>200 bps** in recent years; **incremental cost: ~9.5%** (vs. 10.5% book average). - **Funding Mix:** Diversified with **NCD issuances**, bank partnerships (ICICI), securitizations. - **Maiden NCD (2025):** ₹266 crore successfully issued. - **Credit Ratings:** CRISIL: **AA- (Stable)**, CARE: **AA- (Stable)**, A1+ short-term; reflects improved discipline and investor confidence. #### **Digital Transformation & Operational Efficiency** - **End-to-end Digital Lending:** Fully digital processes in **Micro LAP, vehicle finance, and collections**. - **Key Platforms:** - **Indo Mitra, Connector Apps, Scorecards:** For lead management, underwriting, and field ops. - **IndoStar Connect (Cloud-native LOS):** API-enabled, geo-tagged verifications, digital KYC. - **Self-Service Apps:** EMI tracking, payments, document access. - **Digital Adoption:** Only **3–4% cash transactions**; 7–8% in collections. - **Turnaround Time:** **2 days average** for loan sanctioning due to automated workflows. --- ### **Vision and Market Position** - **Vision:** To be a **leading, multi-product retail NBFC** serving **underserved livelihood-linked borrowers** in Tier 3–5 India. - **Competitive Edge:** - **Brand recall** among transporters and small business owners. - **Referral-based customer acquisition** reducing costs. - **Cross-selling** of Micro LAP via vehicle finance network. - **Cost-efficient, scalable model** using shared branches and tech. - **Growth Flywheel:** Operational improvements, digital tools, declining cost of funds, and strong governance are compounding into **sustainable, profitable growth**. ---