Sammaan Capital Ltd · NSE:SAMMAANCAP
Sammaan Capital — Indiabulls Housing Finance — 9M FY2015-16 Earnings Presentation
57 slides from Sammaan Capital's earnings presentation, Apr 6, 2016
Slide 1: Indiabulls Housing Finance Limited
Indiabulls Housing Finance Limited (CIN: L65922DL2005PLC136029)
Slide 2: Safe Harbour Statement
Safe Harbour Statement This document contains certain forward-looking statements based on current expectations of Indiabulls Housing Finance management. Actual results may vary significantly from the forward-looking statements in this document due to various risks and uncertainties. These risks and
Slide 3: Contents
Contents Pg. No. 1. Business Update 4 2. Operational Update 7 3. Indian Mortgage Market 12 4. Financial and Operational Highlights 24 5. LAP Grading 32 6. Liabilities Profile 38 7. Key Ratios, Valuations and Shareholding 49 8. Detailed Financials 54 3
Slide 4: Business Update
Indiabulls HOME LOANS Business Update
Slide 5: Our Journey
Our Journey 2015-16 ₹ 40 Bn raised through QIP 2014-15 309.8* issue Net worth over ₹ 105 Bn: 2nd highest among private HFCs/ NBFCs 198.4 2012-13 Credit Rating upgraded to AAA Gross disbursements cross ₹1,000 Bn 84.6 Balance Sheet: ₹ 572.3 Bn PAT: ₹ 19.0 Bn RoE: 29% 2011- 12 Conversio
Slide 6: Business Update
Business Update Key Financial Highlights: 9M FY15-16 (ending December 31, 2015) 9M FY 15-16 9M FY 14-15 Growth (%) Loan Assets (₹ Bn) 622.6 480.8 29.5% Total Revenues (₹ Bn) 65.8 51.4 28.1% NII (₹ Bn) 26.8 20.5 30.3% PAT (₹ Bn) 16.7 13.5 23.6% EPS (₹) 43.7 39.4 Year-on-Year (Y-o-Y) Comparison: Q3 FY
Slide 7: Operational Update
Indiabulls HOME LOANS Operational Update
Slide 8: Business Summary
Business Summary • Loans Outstanding : ₹ 622.6 Bn (December 31, 2015) : (US$ 9.58 Bn) • Loan Book CAGR (5 years) : 27 % • Cumulative Loans given to retail Customers : 0.8 Mn • Cumulative Loans Disbursed till date : ₹ 1,236.1 Bn (US$ 19.02 Bn) • Cost to Income Ratio (9M FY16) : 14.4% • Profit After T
Slide 9: Impressive Growth Track Record
Impressive Growth Track Record Loan Assets Revenue NII CAGR: 27% CAGR: 29% CAGR: 22% 73 30 66 27 59 24 623 47 19 522 38 412 13 15 344 25 275 198 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Dec-15 FY11 FY12 FY13 FY14 FY15 9M FY 16 FY11 FY12 FY13 FY14 FY15 9M FY16 Pre-Provisioning Operating Profit PAT EPS (₹)
Slide 10: Credit Ratings
Credit Ratings Long Term Short Term Rating Rating CARE Ratings AAA A1+ Brickwork Ratings AAA CRISIL (A Standard & Poor’s Company) AA+ A1+ ICRA (An Associate of Moody’s Investor Service) AA+ A1+ India Ratings & Research (A Fitch Group A1+ Company) 10
Slide 11: Country Wide Reach
Country Wide Reach Head office • Core credit committee Master Service • Loans above Centers (MSC) predefined limits go to the committee • Regional credit hub Branches • Detailed credit • Walk-in analysis branches • Underwrites high • Customer Service interaction and value cases Centers service deliv
Slide 12: Indian Mortgage Market
Indiabulls HOME LOANS Indian Mortgage Market 12
Slide 13: Recent Trends in Real Estate Industry: Residential
Recent Trends in Real Estate Industry: Residential • Mumbai residential sales up year-on-year by 28%1 • Hyderabad residential sales up year-on-year by 67%1 Economic Times, Dec 1, 2015 • Mumbai residential sales expected to drive realty recovery • Bangalore, with its resilient real estate market was
Slide 14: Recent Trends in Real Estate Industry: Commercial
Recent Trends in Real Estate Industry: Commercial • Office space leasing in the top 7 cities of India is up by 18% y-o-y in CY20151 • Absorption of 40.2 Mn sqft in CY2015 second highest in history after 20111,2 – Leasing up by 32% in Bangalore and 23% in NCR – Best amongst last 5 years for Gurgaon –
Slide 15: Vast Affordable Housing Opportunity
Vast Affordable Housing Opportunity • Urban Housing requirement: estimated at 45 million units by 20221 - Demand continues to increase due to rapid urbanization, growing trend of nuclear families and rising income • Affordable Housing: Policy makers’ focus on Home loans up to ₹ 5 Mn (from sub ₹ 2.8
Slide 16: Indian Housing Finance Industry
Indian Housing Finance Industry Headroom for Growth - Low Mortgage Penetration 88% 81% 41% 26% 29% 17% 20% 09% India Thailand China Korea Malaysia Hong Kong USA UK Source: National Housing Bank, 2013 As a % of GDP • Lower mortgage penetration compared to advanced and emerging economies implies huge
Slide 17: Indian Mortgage Market
Indian Mortgage Market Growing HFC Market Share in a Steadily Expanding Home Loans Market 17% 18% 18% CAGR HFC CAGR: 22% 10,299 8,887 7,526 39% 6,249 39% 5,538 39% 4,595 36% 34% 33% FY10 FY11 FY12 FY13 FY14 FY15 Bank's Share HFC's Share (Amounts in ₹ Bn) • Housing loan market is concentrated in the
Slide 18: Housing Loans: Lowest Risk Asset Class
Housing Loans: Lowest Risk Asset Class Split of Banking NPA levels (FY 12) GNPA (%) Comparison between Banks and HFCs 4.2% Priority Sector Retail Loans Industries 3.6% 3.1% 2.5% 1.3% 1.2% 1.1% 1.1% 2011 2012 2013 2014 Banks HFCs Source: RBI Working Paper Series • Housing loan NPAs are the lowest amo
Slide 19: Recent Government Policy Initiatives
Recent Government Policy Initiatives • Housing for all by 2022: Scheme launched by the government - 20 million new housing units in 500 towns and cities in 7 years - Affordable housing in partnership with the private sector • 100 smart cities plan: Guidelines issued and cities short listed - Outlay
Slide 20: Indian Mortgage Market: Tax Incentives
Indian Mortgage Market Tax Incentives – Low Effective Interest Rates Particular 2015 2010 2000 Loan amount 2.4 2.4 2.4 Nominal Interest Rate(%) 9.55% 9.25% 13.25% Deduction allowed on interest repayment* 0.20 0.15 0.08 Deduction allowed on principal repayment# 0.15 0.10 0.02 Tax Rate applicable 34.6
Slide 21: Buying a Home: Prudent Financial Investment
Buying a Home: Prudent Financial Investment Rental Yield v/s Home Loan Cost 4.5% 3.7% 3.8% 3.9% 3.9% 3.0% 3.1% 2.5% 2.2% 2.1% Ahmedabad Bengaluru Chennai Delhi Hyderabad Kolkata Mumbai Pune India Rent Yield Effective Interest Rate on Home Loan (4.5%) Source: NHB; Industry reports Increasing Affordab
Slide 22: Loan Against Property Market
Loan Against Property Market Secured Loans to Small Businesses Basis of Loan Appraisal Collateral Yields Risk Levels Factory/ office space Lending against components of Inventory 18%+ High business Business receivables Home/ commercial Asset based lending 14% - 18% Moderate property Self-occupied Ca
Slide 23: LAP Growth Opportunity
LAP Growth Opportunity Total finance demand for MSMEs: ₹ 32.6 Tn • LAP loans from HFCs, NBFCs and private banks represent a cost effective and efficient source of finance for SMEs Potential Debt demand : ₹ 26 Tn • Additionally professional customer centric delivery has led to LAP loans rapidly repla
Slide 24: Financial and Operational Highlights
Financial and Operational Highlights 24
Slide 25: Balance Sheet Assets
Balance Sheet Assets 5% 18% Loan Book: 77% Cash & Liquid Investments*: 18% Other Assets: 5% 77% Total Assets As at December 31, 2015 ₹ 712.0 Bn (US$ 10.95 bn) As at December 31, 2014 ₹ 534.0 Bn (US$ 8.22 bn) * Cash, Cash Equivalents and Investments in Liquid Debt Instruments US $ amounts are convert
Slide 26: Asset Composition
Asset Composition Q3 FY 14-15 Q3 FY 15-16 21% 23% 3% 1% 76% 76% Mortgage Loans Commercial Vehicle Loans Corporate Mortgage Loans • Home loans, which forms the majority of incremental disbursals, are disbursed at an average ticket size of ₹ 2.5 Mn; average LTV of 71% (at origination) 26
Slide 27: Loan Book Growth with Steady Spreads and Efficient Capital Deployment
Loan Book Growth with Steady Spreads and Efficient Capital Deployment Loan Assets (₹ Bn) Loans Sold (₹ Bn) Stable Spreads (in preceding 12 months) 623 42 41 13.6% 13.3% 12.6% 74 481 391 32 54 3.4% 3.4% 45 3.2% 549 427 10.2% 9.9% 9.4% 346 Dec-13 Dec-14 Dec-15 Dec-13 Dec-14 Dec-15 Dec-13 Dec-14 Dec-15
Slide 28: Asset Quality
Asset Quality As at December 31, 2015 0.88% 0.86% 0.83% (in ₹ Bn) NPA (90+ dpd*): 5.2 0.40% Provisions for 0.52% 0.48% Contingencies: 7.3 0.48% Of which 0.34% 0.35% NPAs: 3.0 Other provisioning: 4.3 Regulatory Provisioning: 4.9 Dec-13 Dec-14 Dec-15 Excess Provisioning Over Regulatory Gross NPA Gener
Slide 29: Retail Mortgage Loans' Sourcing
Retail Mortgage Loans' Sourcing 84% of Mortgage loans are sourced in-house 16% 12% 72% Direct Sales Team* Branch Walk-ins External Channels • Nearly 85% of the incremental sourcing is done in-house by on-rolls employees *Direct Sales Team - on rolls sales employees 29
Slide 30: Home Loan Profile: Focus on Affordable Housing
Home Loan Profile: Focus on Affordable Housing Average Loan Size 2.5 Mn Maximum Loan to Value 80% Average Loan to Value 71% (at origination) Average Loan Term 15 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing • RBI defines Affordable housing finance as housing
Slide 31: Conservative Loan Against Property Profile
Conservative Loan Against Property Profile Average Loan Size 7.3 Mn Maximum Loan to Value 65% Average Loan to Value 49% (at origination) Average Loan Term 7 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing 31
Slide 32: LAP Grading
LAP Grading A Pioneering Initiative for Improved Risk Management and Greater Transparency 32
Slide 33: Loan Against Property Grading from CRISIL and ICRA
Loan Against Property Grading from CRISIL and ICRA • LAP grading engagement with CRISIL (A Standard and Poor’s Company) and ICRA (A Moody’s Investors Service Company) - CRISIL grades the loans on aspects such as past payment track record, nature of business and financial parameters, nature of proper
Slide 34: ICRA LAP Grading Methodology
ICRA LAP Grading Methodology (2nd rating agency to grade LAP loans) • In Q2 FY 2015-16, IBHFL tied up with rating agency ICRA to grade its incremental LAP loans • ICRA LAP Grading reflects ICRA’s assessment of the credit quality of the loan on a ICRA developed customised scale Grading Assessment Par
Slide 35: ICRA LAP Grading 1st Report
1st Report (2nd rating agency to grade LAP loans) ICRA LAP Grading Initial Assessment Report Grading Characteristics Level of credit Grading Scale Grading Distribution Median LTV Median FOIR worthiness LAP1 Excellent 13.2% 22% 39% LAP2 Good 67.5% 45% 57% LAP3 Average 18.6% 63% 69% LAP4 Below Average
Slide 36: CRISIL LAP Grading Methodology
CRISIL LAP Grading Methodology Detailed assessment of key factors determining credit worthiness Financial Strength Business Management • Interest and debt service cover • Business sector and sectoral prospects • Revenues, margin and profitability • Business duration and track record • Networth and l
Slide 37: 3rd Report CRISIL LAP Grading: Updated for 9M FY16
3rd Report CRISIL LAP Grading: Updated for 9M FY16 Grading Segment Characteristics Total Interest Outstanding Quality of Disbursals Service Loan to Value EBITDA Grading Scale Liabilities/ LAP Loans# 9M FY16* Coverage (LTV) Margins Total Ratio (ISCR) Networth LAP1 Highest 7.9% 5.5 – 7.6 0.7 - 1.5 51%
Slide 38: Liabilities Profile
Indiabulls HOME LOANS Liabilities Profile 38
Slide 39: Liabilities
Liabilities 6% 15% Share Holders’ Funds: ₹ 105.2 Bn (US$ 1.62 Bn) Borrowings: ₹ 562.2 Bn (US$ 8.65 Bn) Other Liabilities: ₹ 44.6 Bn (US$ 0.69 Bn) 79% Total Liabilities: As of December 31, 2015: ₹ 712.0 Bn (US$ 10.95 Bn) As of December 31, 2014: ₹ 534.0 Bn (US$ 8.22 Bn) US $ amounts are converted bas
Slide 40: Funding Mix
Funding Mix 1% 2% 7% 7% 6% 11% 11% 12% ECB 55% 53% 49% Commercial Papers Sell Down Bank Loans Bonds 27% 28% 31% Dec-13 Dec-14 Dec-15 Total Borrowings: As of December 31, 2015: ₹ 562.2 Bn (US$ 8.65 Bn) As of December 31, 2014: ₹ 437.5 Bn (US$ 6.73 Bn) US $ amounts are converted based on the exchange
Slide 41: Strengthening Liability Profile
Strengthening Liability Profile Borrowings (₹ Bn) 562 8.5 500 437 7.5 355 Borrowings 400 6.5 6.1 5.3 5.5 300 Net Gearing 4.3 4.5 200 3.5 100 2.5 Net Gearing: Borrowings Net of ‘Cash & Cash Equivalents’ and ‘Investments in Liquid - 1.5 Debt Instruments’ Dec-13 Dec-14 Dec-15 Total Funding (₹ Bn) Contr
Slide 42: Optimally Matched Balance Sheet
Optimally Matched Balance Sheet Maturity Profile (As of March 31, 2015) 279 269 178 * 174 129 115 Up to 1 yr 1 - 5 yrs Over 5 yrs Assets Liabilities (Amounts in ₹ Bn) • * Assets in the ‘Up to 1 Yr’ bucket includes ₹ 96.3 Bn (as of March 31, 2015) of Cash, Cash equivalents and investments in liquid d
Slide 43: Components of Sustained Margins
Components of Sustained Margins Funding Mix Cost to Income Credit Costs* (annualised) 1% 2% 7% 7% 6% 11% 11% 12% 17.1% 0.70% 16.4% 14.4% 0.67% 55% 53% 49% 0.62% 27% 28% 31% Dec-13 Dec-14 Dec-15 FY14 FY15 9M FY16 FY14 FY15 9M FY16 * Credit Costs include both write offs and provisions Bonds Bank Loans
Slide 44: 3 Pillars of Long-Term Growth
3 Pillars of Long-Term Growth Profitability Sustainability Scalability Focus on profitability in each business Stable senior and mid manager levels Efficient capital deployment segment - Senior personnel in key business - Focus on loan sell downs functions unchanged since inception 10 - Home loan se
Slide 45: Eminent and Experienced Board of Directors
Eminent and Experienced Board of Directors Board of Directors with pre-eminence and experience in diverse fields • Mr. Sameer Gehlaut : Executive Chairman • Mr. Gagan Banga : Vice Chairman and Managing Director • Dr. K.C. Chakrabarty : Former Deputy Governor of the Reserve Bank of India • Justice Su
Slide 46: Finnovate – A Financial Innovation Contest
Finnovate – A Financial Innovation Contest Invitation to individuals, companies and start-ups Based on technology based innovative path-breaking ideas • Improve and automate processes for increased efficiency • Reduce manual dependence and increase IBHFL’s technical skill and competence • Enhance cu
Slide 47: Indiabulls Foundation: Corporate Social Responsibility
Indiabulls Foundation: Corporate Social Responsibility Free medical clinics to provide primary and preventive health care to the underprivileged Swasthya Kalyan Vahika vehicles: 7 Mobile medical vans provide free primary Health healthcare services to nearly 0.2 Mn patients every year Cleft deformity
Slide 48: Indiabulls Foundation: Corporate Social Responsibility
Indiabulls Foundation: Corporate Social Responsibility Provided timely relief to 1,500 families with 5 kg nutritional packets to each Disaster Relief family. The supplement is a ready to eat mixture providing well needed nourishment to the Chennai flood affected people. Indiabulls Tie-up with MKCL (
Slide 49: Key Ratios, Valuations and Shareholding
Key Ratios, Valuations and Shareholding 49
Slide 50: Rising Productivity Ratios
Rising Productivity Ratios 9M FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 No. of Employees 5,361 4,840 4,099 4,072 4,243 Profit per employee (₹ Mn) 4.2 3.9 3.8 3.1 2.4 Asset per employee (₹ Mn) 132.8 118.2 108.4 80.9 58.5 Cost Income Ratio 14.4% 16.4% 17.1% 18.0% 18.7% *Annualized 50
Slide 51: Rising Productivity Ratios
Rising Productivity Ratios 9M FY 2016^ FY 2015 FY 2014 FY 2013 FY 2012 Pre Tax RoAA (%) 4.8%* 4.9% 4.8% 4.9% 4.9% Post Tax RoAA (%) 3.6%* 3.7% 3.8% 3.8% 3.7% RoE (%) 27%* 29% 27% 26% 22% Capital Adequacy (%) 21.64% 18.36% 19.14% 18.47% 18.86% - Tier I 18.83% 15.25% 15.05% 14.96% 18.21% - Tier II 2.8
Slide 52: Valuations and Returns
Valuations and Returns Dec-15 Mar-15 Mar-14 Mar-13 Mar-12 Market Price per share (₹) 697.0* 557.9 285.6 271.8 207.1 Market Capitalisation (US$ Bn) 4.51 3.12 1.50 1.34 1.02 PE Ratio (times) 12.0 10.2 6.0 6.8 6.5 Book Value per share (₹) 250.1 184.5 168.7 165.4 157.7 Price to Book Ratio (times) 2.8 3.
Slide 53: Shareholding Pattern
Shareholding Pattern 15.3% 24.2% 2.4% 58.1% Promoters Foreign Shareholding MFs/Banks/IFI Public As on 31st December, 2015 MF: Mutual Funds; IFI: Indian Financial Institutions 53
Slide 54: Detailed Financials
Indiabulls HOME LOANS Detailed Financials 54
Slide 55: Consolidated Balance Sheet
Consolidated Balance Sheet ₹ 125.9 Bn of Cash & Cash Equivalents and Investments in Liquid Debt Instruments 55
Slide 56: Consolidated Income Statement
Consolidated Income Statement 56
Slide 57: Thank you
Indiabulls HOME LOANS Thank you
Indiabulls Housing Finance — 9M FY2015-16 Earnings Presentation on 6ix