Arman Financial Services Limited · NSE:ARMANFIN
Arman Financial Services — H1 FY22 Earnings Presentation
37 slides from Arman Financial Services's earnings presentation, November 2021
Slide 1: Arman Financial Services Ltd. Q2 & H1 FY22 Investor Presentation
INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Q2 & H1 FY22 - Investor Presentation November 2021
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 – Q2 & H1 FY22 13 Liability Overview 16 Company Overview 24 Product Overview 28 Annexures
Slide 4: Financial Performance Update – Q2 & H1 FY22
Financial Performance Update – Q2 & H1 FY22
Slide 5: Q2 FY22 – Financial Performance Highlights
Q2 FY22 – Financial Performance Highlights ✓ Total AUM up by 29% YoY to INR 9,083 Mn in Q2FY22 vs INR 7,043 Mn in Q2FY21 Shareholders Equity Stood at INR 1,938 Mn in Q2 FY22 ✓ Consolidated Debt-Equity Ratio stood at 4.05x on 30th September’21 Collections in microfinance business which was impacted d
Slide 6: Update on Collections
Update on Collections Update on Collections ❑ Collections in microfinance business which was impacted during Q1 FY22 due to second wave has recovered consistently during the Q2 FY22.Collections were severely impacted due to covid second wave restrictions, since our collection executives were not abl
Slide 7: Update on Liquidity & Disbursements
. Update on Liquidity & Disbursements Update on Liquidity ❑ Healthy Liquidity position with INR 1,467 Mn in cash/bank balance, liquid investments, and undrawn CC limits • The company has duly repaid all the debt obligations that were due in Q2 FY22. • ALM continues to remain positive, and the compan
Slide 8: Q2 & H1 FY22 – Consolidated Profit & Loss Statement
Q2 & H1 FY22 – Consolidated Profit & Loss Statement Particulars (INR Mn) Q2 FY22 Q2 FY21 YoY (%) H1 FY22 H1 FY21 YoY (%) Assets Under Management (AUM) 9,083 7,043 29% 9,083 7,043 29% Disbursements 2,665 507 425% 3,880 507 665% Shareholder’s Equity * 1,895 1,775 7% 1,868 1,722 8% Income from Operatio
Slide 9: Q2 & H1 FY22 – Consolidated Balance Sheet
Q2 & H1 FY22 – Consolidated Balance Sheet Particulars (in INR Mn) Consolidated Standalone Consolidated Standalone ASSETS Sep 2021 March 2021 Sep 2021 March 2021 LIABILITIES & EQUITY Sep 2021 March 2021 Sep 2021 March 2021 Financial Assets Equity Share capital 85 85 85 85 Cash and cash equivalents 47
Slide 10: Microfinance Namra Performance Update
Q2 & H1 FY22 – Microfinance “Namra” Performance Update Particulars (INR Mn) Q2 FY22 Q2 FY21 YoY (%) H1 FY22 H1 FY21 YoY (%) ❖ Q2FY22 MFI AUM stood at INR 7,417 Mn – higher by 42% vis-à-vis last year Asset Under Management 7,417 5,230 42% 7,417 5,230 42% • Active MFI Customer base stood at 3.28 Lakhs
Slide 11: Q2 FY22 - Microfinance Performance Update
Q2 FY22 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 7,417 2,297 2,200 367 376 356 6,431 6,307 332 309 5,487 1,473 5,230 985 386 Q2 FY21 Q3FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22
Slide 12: Q2 FY22 – Microfinance Performance Update
Q2 FY22 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 24.7% 23.6% 23.1% 22.0% 22.6% 52.9% 42.1% 41.8% 44.0% 40.9% 15.2% 14.4% 13.1% 13.3% 11.5% Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Yields % NIM % Cost / Income (%) Asset Quality
Slide 13: Standalone Performance Update (2W & MSME)
Q2 & H1 FY22 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q2 FY22 Q2 FY21 YoY (%) H1 FY22 H1 FY21 YoY (%) Asset Under Management 1,666 1,813 -8% 1,666 1,813 -8% Disbursements 465 121 285% 696 121 475% ❖ Standalone AUM stood at INR 1,666 Mn on September’21 • MSME AUM stood at INR
Slide 14: Q2 FY22 - MSME Performance Update
Q2 FY22 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 379 118 353 1,188 1,253 1,247 102 99 1,169 1,131 93 96 240 160 55 Q2 FY21 Q3 FY21 Q4FY21 Q1FY22 Q2FY22 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Asset Quality# Y
Slide 15: Q2 FY22 - 2W Performance Update
Q2 FY22 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 112 625 105 45 544 37 459 76 410 419 71 31 30 30 65 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Asset Quality Yields % 26.8% 2
Slide 16: Liability Overview
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Slide 17: Efficient Liability Management
Efficient Liability Management Funding profile is well diversified with increase in share of funds from NCDs & DFIs FY21 - Borrowing Mix % Q2 FY22 - Borrowing Mix % INR 7,665 Mn * INR 7,928 Mn * Banks & SFBs 2% 1% 20% DFIs (NABARD, MUDRA & SIDBI) 21% 27% 28% NBFC / FI 6% 5% Securitization 7% 13% 10%
Slide 18: Lending partners
Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners NCDs & ECB 22 18
Slide 19: Company Overview
Company Overview
Slide 20: Key Strengths
Key Strengths Genesis Robust Risk Management Framework ▪ Arman Financial Services (“Arman”) is a diversified NBFC ▪ Consistent rating upgrades backed by strong financial & operating focusing on large under-served rural & semi-urban retail markets performance – Currently rated BBB+ by CARE Ratings an
Slide 21: Business Progression
Business Progression Company Disbursement Despite COVID- Raised PE Expanded to Crosses 100 crosses 750 Cr; incorporated. 19 challenges, funding from Maharashtra, branches across 5 100% Cashless Started bill Launched 2W the company Incofin; MP, UP & states & 3 products; disbursements; discounting & L
Slide 22: Product Snapshot
Product Snapshot • 29 years of existence • Active customer base of 3.91 lakh • Employee strength of 2,178 employees • Completely in-house operations – Sourcing, Credit & Collections Microfinance MSME Loans 2-Wheeler Loans Rural 2W Loans % of Total AUM 81% 14% 4% 1% (in Pilot Stage) LTV Unsecured Cas
Slide 23: 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 24: Technological Initiatives to Strengthen Operations
Technological Initiatives to Strengthen Operations ❖ In FY19, the company launched an integrated mobile interface for its MFI field staff to enable seamless on-boarding of MFI customers by digitizing & standardizing the loan origination and appraisal process. ‘This technology has been successfully i
Slide 25: Strong Growth in AUM & Disbursements
Strong Growth in AUM & Disbursements….. Total AUM (INR Mn) 10000 • Diversified portfolio of 9,848 Mn in Q2 FY22 split between – 10000 9000 • Microfinance: INR 7,417 Mn (81.7%), 8,599 8,144 8000 • MSME Loans: INR 1,247 Mn (13.7%) 8000 17% 6,847 15% 7000 • 2-Wheeler Loans: INR 419 Mn (4.6%) 11% 6% • 6
Slide 26: 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: 37% CAGR: 36% 6.7% 2,152 Demonetization 1,933 28.7% 28.3% 27.4% 4.6% 1,411 1,
Slide 27: Shareholding Pattern
Shareholding Pattern SHAREHOLDING – 30th September 2021 Promoters, 27.5% Public, 50.2% Elevation Capital, 22.3% Source – Company ▪ Elevation Capital (Erstwhile SAIF Partners) invested INR 500 Mn in CCDs in April 2018 Post conversion of CCD’s, Elevation Capital stake in the company stands at 22.3% ▪
Slide 28: Product Overview
MSME EOANS > Product Overview
Slide 29: Product Overview: Microfinance
Product Overview: Microfinance Product Overview FY21 – Key Metrics (Mn) ▪ JLG model with small ticket loans (Avg. Ticket Size – INR 6,431 4,176 35,000) given to women borrowers for income generating activities such as Livestock, Dairy, Agri allied, Kirana Stores AUM (INR Mn) Disbursement (INR Mn) ▪
Slide 30: Product Overview: 2W & Rural 2W Loans
Product Overview: 2W & Rural 2W Loans Product Overview FY21 – Key Metrics (Mn) ▪ Hypothecation (secured) loans given to self-employed / cash- 459 246 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 31: 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 36 branches • Feet-on-Stre
Slide 32: Group – CFO contact
Vivek Modi Group – CFO Pushpa Mani/Chintan Mehta Arman Financial Services Ltd Dickenson World Tel : + 91 79 4050 7000 (Extn. 210) Tel : +91 9911684123 / 9892183389 Email : vivek@armanindia.com Email : armanfinancial@dickensonworld.com
Slide 33: Annexures
Annexures
Slide 34: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Disbursement growth is driven by customer & branch addition AUM growth exceeds MFI industry growth rates 3.0 900.0 800.0 Demonetization 2.24 2.32 6,431 Demonetization 6,207 2.5 700.0 2.0 1.70 600.0 4,837 500.0 1.5 1.13 400.0 3,170 0.74 653 1.0 590 300.0 400 418 200.0
Slide 35: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency MFI AUM Mix (%) Demonetization 2% 1% 1% 6% 1% 61% 7% 9% 5% 21% 20% 56% 17% 18% 18% 48% 13% 43% 45% 21% 21% 18% 21% 27% 72% 25% 27% 44% 31% 27% 27% FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20
Slide 36: 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 1000.0 25.7% 25.5% 30.0% 24.9% 23.9% 24.4% 800.0 25.0% COVID-19 600.0 20.0% 1,017 955 15.0% 18.4% 900 15.6% 16.5% 400.0 738 10.0% 14.8% 14.0% 200.0 459 5.0% 0.0% 0.0 FY17 FY18 FY19 FY20 F
Slide 37: MSME Loans: 5-Year Performance
MSME Loans: 5-Year Performance Disbursement Growth AUM Growth 3500 33000 1,433 30000 3000 27000 24,586 1,254 2500 992 24000 21000 2000 18000 16,284 11,246 15000 1500 12000 9,756 461 1000 9000 1,362 1,054 6000 978 500 61 3000 527 674 0 64 0 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 Arman MSME
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