Arman Financial Services Limited · NSE:ARMANFIN
Arman Financial Services — Q4 FY20 Earnings Presentation
35 slides from Arman Financial Services's earnings presentation, July 2020
Slide 1: Arman Financial Services Ltd. Q4 FY20 Investor Presentation
INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Q4 FY20 - Investor Presentation July 2020
Slide 2: Disclaimer
DISCLAIMER Certain statements in this document that are not historical facts are forward looking statements. Such forward-looking statements are subject to certain risks and uncertainties like government actions, local, political or economic developments, technological risks, and many other factors
Slide 3: Contents
CONTENTS 04 Performance Update – Q4 FY20 13 Liability Overview 16 Company Overview 24 Product Overview 28 Annexures
Slide 4: Financial Performance Update – Q4 & FY20
Financial Performance Update – Q4 & FY20
Slide 5: Q4 & FY20 – Financial Performance Highlights
Q4 & FY20 – Financial Performance Highlights Total AUM increased by 26% YoY to INR 8,599 Mn (Q4 FY19 AUM: INR 6,848 Mn) ✓ Adjusted for the lower new loan booking of INR 750-800 Mn due to Covid, the FY20 AUM would have grown by 35-40% YoY Total Disbursements Grew by 4% YoY to INR 2,292 Mn in Q4 FY20;
Slide 6: Impact of Covid-19 Pandemic on the Operations – (1/2)
Impact of Covid-19 Pandemic on the Operations – (1/2) Impact on Assets under Management and Disbursements AUM Impact - Segment Wise Disbursement Impact - Segment Wise All Figures in INR Mn Q4 FY20 vs. Q4 FY19 Q4 FY20 vs. Q4 FY19 Full-Year FY20 vs. FY19 Q4 FY20 (COVID COVID YOY % Q4 FY20 (COVID COVID
Slide 7: Impact of Covid-19 Pandemic on the Operations – (2/2)
Impact of Covid-19 Pandemic on the Operations – (2/2) Update on Collections ❑ MSME & MFI: ▪ In-line with the broader microfinance industry, and as advised by SRO bodies like MFIN and Sa-Dhan, Arman had extended moratorium to almost all of its MFI and MSME customers for the months of April & May 2020
Slide 8: Q4 & FY20 – Consolidated Profit & Loss Statement
Q4 & FY20 – Consolidated Profit & Loss Statement As per IND-AS Particulars (INR Mn) Q4 FY20 Q4 FY19 YoY (%) FY20 FY19 YoY (%) Assets Under Management (AUM) 8,599 6,848 26% 8,599 6,848 26% Disbursements 2,292 2,205 4% 8,736 7,836 12% Shareholder’s Equity * 1,722 1,232 40% 1,722 1,232 40% Income from
Slide 9: Q4 & FY20 – Microfinance “Namra” Performance Update
Q4 & FY20 – Microfinance “Namra” Performance Update Particulars (INR Mn) Q4 FY20 Q4 FY19 YoY (%) FY20 FY19 YoY (%) ❖ Witnessed healthy traction in AUM (+28 YoY) driven by an increase in customer Asset Under Management 6,215 4,838 28% 6,215 4,838 28% base and average ticket size Disbursements 1,802 1
Slide 10: Q4 FY20 - Microfinance Performance Update
Q4 FY20 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 6,215 395 390 5,826 1,802 375 5,553 1,729 5,137 1,657 1,605 324 4,837 1,395 278 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4
Slide 11: Q4 FY20 – Microfinance Performance Update
Q4 FY20 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 25.6% 26.0% 26.0% 25.6% 24.7% 52.9% 49.4% 40.7% 43.3% 36.9% 14.8% 15.0% 16.0% 12.7% 13.3% Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Yields % NIM % Cost / Income (%) Asset Quality
Slide 12: Q4 & FY20 – Standalone Performance Update (2W & MSME)
Q4 & FY20 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q4 FY20 Q4 FY19 YoY (%) FY20 FY19 YoY (%) ❖ Witnessed strong growth in MSME AUM (+44% YoY) to INR 1,433 Mn as the no. of Asset Under Management 2,384 2,010 19% 2,384 2,010 19% loans disbursed increased by 29% YoY Disbursement
Slide 13: Q4 FY20 - MSME Performance Update
Q4 FY20 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 368 363 117 1,433 108 1,330 335 333 105 1,257 299 92 1,100 992 79 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Asset Quality
Slide 14: Q4 FY20 - 2W Performance Update
Q4 FY20 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 1,017 988 1,018 960 951 274 64 66 63 59 57 213 207 205 157 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Asset Quality Yields %
Slide 15: Liability Overview
nee ‘Liability Overview
Slide 16: Efficient Liability Management
Efficient Liability Management Funding profile is well diversified with increase in share of funds from Banks/SFB’s and NCDs Q4 FY19 - Borrowing Mix % Q4 FY20 - Borrowing Mix % INR 5,885 Mn INR 7,655 Mn * Banks & SFBs 3% 2% 10% 15% NABARD & MUDRA 28% 12% 6% 36% NBFC / FI 6% Securitization 5% ECB 29%
Slide 17: Lending partners
Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners NCDs & ECB 22 17
Slide 18: Company Overview
Company Overview
Slide 19: Key Strengths
Key Strengths Genesis Robust Risk Management Framework ▪ Arman Financial Services (“Arman”) is a diversified NBFC ▪ Superior Asset Quality – GNPA: 1.1%; NNPA: 0.2% (FY20) focusing on large under-served rural & semi-urban retail markets ▪ Consistent rating upgrades backed by strong financial & operat
Slide 20: Business Progression
Business Progression Company Disbursement Raised PE Expanded to Crosses 100 crosses 750 Cr; incorporated. funding from Maharashtra, branches across 5 100% Cashless Started bill Launched 2W Incofin; MP, UP & states & 3 products; disbursements; discounting & Loans Disbursement Uttarakhand; Disbursemen
Slide 21: Product Snapshot
Product Snapshot • 28 years of existence • Active customer base of 4.48 lakh • Employee strength of 1,812 employees • Completely in-house operations – Sourcing, Credit & Collections Microfinance MSME Loans 2-Wheeler Loans Rural 2W Loans % of Total AUM 72% 17% 11% 1% (in Pilot Stage) LTV Unsecured Ca
Slide 22: Differentiated Operations
Differentiated Operations Focus on small-ticket retail loans to the large under-served informal segment customer in rural & semi-urban geographies Diversifying products, geographies, sources of funds and delivering growth by increase in volumes rather than ticket sizes KEY STRATEGIC DIFFERENTIATORS
Slide 23: Strong Growth in AUM & Disbursements
Strong Growth in AUM & Disbursements….. Total AUM (INR Mn) 10000 • Diversified portfolio of 8,599 Mn in Q4 FY20 split between – 50% 10000 9000 • Microfinance: INR 6,215 Mn (71%), 8,599 8000 76%# • MSME Loans: INR 1,433 Mn (17%) 8000 6,847 17% 7000 14% • 2-Wheeler Loans: INR 951 Mn (11%) 11% • 6000 6
Slide 24: While Maintaining Superior Cost Efficiency & Asset Quality
…..While Maintaining Superior Cost Efficiency & Asset Quality Gross Income and Net Total Income (INR Mn) Yield % and NIM % Focus on risk have led to immaculateDemonetization through-cycle asset quality Demonetization CAGR: 49% CAGR: 47% 2,152 2.6% 2.6% * Demonetization 2.0% 28.7% 28.3% 27.4% 1,411 2
Slide 25: Shareholding Pattern
Shareholding Pattern SHAREHOLDING – 31st March 2020 Promoters, 27.7% Public, 49.9% SAIF Partners, 22.4% Source – Company ▪ *SAIF Partners invested INR 500 Mn in CCDs in April 2018 Post conversion of CCD’s, SAIF Partners stake in the company stands at 22.4% ▪ Mr. Mridul Arora, MD at SAIF Partners is
Slide 26: Product Overview
MSME EOANS )S Product Overview
Slide 27: Product Overview: Microfinance
Product Overview: Microfinance Product Overview FY20 – Key Metrics (Mn) ▪ JLG model with small ticket loans (Avg. Ticket Size – INR 6,215 6,531 26,000) given to women borrowers for income generating activities such as Livestock, Dairy, Agri allied, Kirana Stores AUM (INR Mn) Disbursement (INR Mn) ▪
Slide 28: Product Overview: 2W & Rural 2W Loans
Product Overview: 2W & Rural 2W Loans Product Overview FY20 – Key Metrics (Mn) ▪ Hypothecation (secured) loans given to self-employed / cash- 951 843 salaried customer in the informal segment in semi-urban / rural areas for a 2W AUM (INR Mn) Disbursement (INR Mn) ▪ Currently operates only in Gujarat
Slide 29: Product Overview: MSME Loans
Product Overview: MSME Loans Product Overview MSME Process Overview ▪ Individual enterprise / working capital loans for small rural businesses in low competition areas • In-house sourcing team (No DSAs) ▪ Currently operates across 3 states – Gujarat, MP & Maharashtra, with 35 branches • Feet-on-Stre
Slide 30: Group – CFO
Vivek Modi Group – CFO Mandar Kapse / Chintan Mehta Arman Financial Services Ltd Dickenson World Tel : + 91 79 4050 7000 (Extn. 210) Tel : + 91 9867550004 / +91 9892183389 Email : vivek@armanindia.com Email : armanfinancial@dickensonworld.com
Slide 31: Annexures
Ess to INCLUSION 1 = Annexures
Slide 32: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Disbursement growth is driven by customer & branch addition AUM growth exceeds MFI industry growth rates 3.0 Demonetization 9000 CAGR: 57% 2.5 2.24 2.32 8000 7000 6,215 2.0 1.70 6000 Demonetization 1.33 5000 4,837 1.5 3,170 4000 0.80 0.74 6,531 1.0 5,896 3000 4,001 2
Slide 33: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency MFI AUM Mix (%) Demonetization 1% 1% 61% 7% 18% 21% 20% 56% 17% 18% 48% 13% 21% 43% 21% 40% 39% 21% 92% 27% 82% 25% 72% 44% 31% 27% FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20
Slide 34: 2W Loans: 5-Year Performance
2W Loans: 5-Year Performance Yields (%) & NIM (%) Trend Arman 2W AUM/ has seen steady growth over FY15-20 1200.0 CAGR: 14% 1000.0 35.0% 32.1% 30.4% 800.0 30.0% 25.7% 24.9% 23.9% 25.5% 25.0% 600.0 20.0% 1,017 951 900 20.4% 19.6% 400.0 738 18.4% 15.0% 14.8% 15.6% 16.5% 555 493 10.0% 200.0 5.0% 0.0% 0.
Slide 35: MSME Loans: 3-Year Performance
MSME Loans: 3-Year Performance Disbursement Growth AUM Growth 3500 CAGR: 61% 33000 CAGR: 76% 1,433 30000 3000 27000 24,586 2500 992 24000 21000 2000 18000 16,284 15000 1500 12000 9,756 461 1000 9000 1,362 1,054 6000 978 500 61 3000 527 0 64 0 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 Arman MSME disbur
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