Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q2 FY2015 Earnings Presentation
40 slides from Mahindra & Mahindra Financial Services's earnings presentation, October 2014
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update
Mahindra & Mahindra Financial Services Limited Quarter Result Update SEPTEMBER - 2014 Corporate Office: Regd. Office: Mahindra Towers, 4th Floor, Gateway Building, Apollo Bunder, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 001 India Mumbai 400 018 India Tel: +91 22 2289 5500 Fax: +91 22 2287 5485 Tel:
Slide 2: Company overview
Company overview Transforming rural lives across the country 2
Slide 3: Background
Background • Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 763 billion)*, one of India’s leading tractor and utility vehicle manufacturers • MMFSL (Mcap: Rs 160 billion)* is one of India’s leading non-banking finance companies foc
Slide 4: MMFSL Group structure
MMFSL Group structure (1) Mahindra Insurance 85% Brokers Limited (“MIBL”) Mahindra Rural Mahindra & Mahindra Limited 87.5%(2) Housing Finance Limited (“MRHFL”) 51.20% Mahindra Finance 49% USA LLC (Joint venture with Rabobank group subsidiary) Mahindra Business & Mahindra & Mahindra 100% Consulting S
Slide 5: Our Journey Thus Far
Our Journey Thus Far Long term debt rating upgraded to AAA by India Ratings and Brickwork. CARE Ratings assigned AAA rating to long term debt FY 15 Crossed 3 million cumulative customer contracts FY 14 Stake sale in MIBL to Inclusion resources pvt. Ltd. QIP Issue of Rs. 8.67 Bn FY 13 Maiden QIP Issu
Slide 6: Shareholding pattern
Shareholding pattern (as on September 30, 2014) Key Shareholders Cartica Capital Ltd Aranda Investments (Mauritius) Ltd Non Government of Singapore Mutual ESOP Institutions Trust Funds & JP Morgan SICAV Investment Company 5.3% 0.9% DII 1.1% JP Morgan Funds – Emerging Markets Equity Fund Ma
Slide 7: Industry overview
Industry overview Transforming rural lives across the country 7
Slide 8: Automobile Finance Market to Grow by 16-18% over the next years
Automobile Finance Market to Grow by 16-18% over the next 5 years Growth in New Vehicle Finance Disbursements CAGR FY13- (Rs. billion) FY11E FY12E FY13E FY14P FY18P FY18P Cars 466 503 508 471 1007 14-16% Utility Vehicles 155 180 251 239 605 18-20% Commercial Vehicles 402 471 414 309 900 16-18% Two-W
Slide 9: Auto Industry Long term growth potential
Auto Industry Long term growth potential Strong prospects in the long-term. FY03-08 FY08-13 FY14P FY13-18P Growth to be driven by increase in income of households and higher CAGR (%) CAGR (%) (%) CAGR (%) passenger vehicle penetration Cars and Uvs 17 12 (6-8) 12-14 Small Cars are expected to rec
Slide 10: Overall Demand Drivers
Overall Demand Drivers Increase in affordability Growth in Addressable Market Entry of New Players and New Model Launches Increase in dealerships and access to Finance Reduction in holding period, which increases the demand for second vehicles Growth in Economic Activity Infrastructure
Slide 11: Auto Industry Volume
Auto Industry Volume Domestic Sales H1FY15 H1FY14 Y-o-Y FY14 (Volume in „000) (Nos.) (Nos.) Growth (%) (Nos.) Passenger Vehicles (PVs) Passenger Cars / Vans 891 856 4.1% 1,785 UVs 361 345 4.6% 716 Commercial Vehicles (CVs) M&HCVs 104 105 -1.2% 201 LCVs 189 221 -14.4% 432 Three Wheelers 282 240 17.8%
Slide 12: Business Strategy
Business Strategy Transforming rural lives across the country 12
Slide 13: Business Strategy
Business Strategy Grow in rural and semi urban markets for vehicle and automobile financing Expand Branch Network Leverage existing customers base through Direct Marketing Initiatives Diversify Product Portfolio Broad base Liability Mix Continuing to attract, train and retain talented employees Effe
Slide 14: Extensive branch network
Extensive branch network MMFSL has an extensive branch network with presence in 25 states and 5 union territories in India through 1055 offices as of September 30, 2014 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 5 HP 23 27 PB UC 18 22 H
Slide 15: Diversified Product Portfolio
Diversified Product Portfolio Loans for auto and utility vehicles, tractors, cars, commercial Vehicle Financing vehicles and construction equipments Pre-Owned Loans for pre-owned cars, multi-utility vehicles, tractors and Vehicles commercial vehicles Loans for varied purposes like project fina
Slide 16: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Half year ended Half year ended Year ended Asset Class September – 14 September – 13 March – 14 Auto/ Utility vehicles 32% 30% 32% Tractors 18% 20% 20% Cars 22% 23% 22% Commercial vehicles and 10% 13% 11% Construction equipments Pre-owned vehicles and o
Slide 17: Break up of AUM
Break up of AUM As on As on As on Asset Class September – 14 September – 13 March – 14 Auto/ Utility vehicles 29% 27% 29% Tractors 18% 19% 19% Cars 23% 24% 24% Commercial vehicles and 14% 16% 15% Construction equipments Pre-owned vehicles and others 16% 14% 13% 1. Approximate percentages 2. Dealer A
Slide 18: Credit Rating
Credit Rating MMFSL believes that its credit rating and strong brand equity enables it to borrow funds at competitive rates Credit Rating India Ratings Outlook Long term and Subordinated debt AAA (ind) Stable CARE Ratings Outlook Long term and Subordinated debt AAA -- Brickwork Outlook Long term a
Slide 19: Broad based Liability Mix
Broad based Liability Mix Total consortium size of Rs.15.3 Bn comprising several banks Funding Mix by Investor profile (Sep’ 14) Funding Mix by type of Instrument (Sep’ 14) Insurance Banks f or Co. & Assignment CP, ICD Assignment Institutions (Rs.20944 (Rs. 25655 (Rs.24369 mn) (Rs.20944 mn) mn) mn
Slide 20: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Training programs for employees on regular All our offices are connected to the centralised basis data centre in Mumbai through Lease line/HHD 5 days induction program on product Through hand
Slide 21: Financial Information
Financial Information Transforming rural lives across the country 21
Slide 22: Key Financials
Key Financials Q2FY15 Vs Q2FY14 (Figures on standalone basis) Total Income Profit after Tax Value of Asset Financed Rs 13,689 mn Rs 2,071 mn Rs 57,804 mn 13% 6% 0.4% Rs 12,127 mn Rs 2,212 mn Rs 58,036 mn H1FY15 Vs H1FY14 (Figures on standalone basis) Total Income Profit after Tax Value of Asset Fina
Slide 23: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) 318.58 30% 296.17 33% 49.53 240.38 38.95 174.98 27.95 26.52 FY12 FY13 FY14 H1FY15 FY12 FY13 FY14 H1FY15 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) 95.9 20% 37% 89.6 8.83 8.87 6.20 56.7 47.9 3.62 FY12
Slide 24: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 35.4% 3.9% 4.0% 3.2% 3.0% 33.3% 33.0% 32.9% 32.6% 2.2% FY12 FY13 FY14 H1FY14 H1FY15 FY12 FY13 FY14 H1FY14 H1FY15 Return on Net Worth (RONW) (3) (%) Asset Quality 22.8% 23.5% Gross NPA Net NP
Slide 25: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Half year ended Half year ended Year ended Particulars (Rs. in Million) September – 14 September – 13 March - 14 Revenue from operations 26,288 22,956 49,216 Other income 231 156 314 Total Revenue 26,519 23,112 49,530 Expenses: Employee benefits expense* 2,259 1,29
Slide 26: Standalone Balance Sheet
Standalone Balance Sheet As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,128 1,127 1,127 b) Reserves and Surplus 53,418 47,559 49,815 Shareholders' funds 54,546 48,686 50,942 Non-current liabilities a) L
Slide 27: Standalone Balance Sheet (Cont’d)
Standalone Balance Sheet (Cont’d) As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 ASSETS Non-current assets a) Fixed Assets 1,057 1,126 1,195 b) Non-current investments 6,292 4,552 5,263 c) Deferred tax assets (Net) 3,517 2,446 3,151 d) Long-term loans and advances
Slide 28: Key Subsidiaries
Key Subsidiaries Transforming rural lives across the country 28
Slide 29: Mahindra Rural Housing Finance
Mahindra Rural Housing Finance Half year ended Half year ended Year ended Particulars (Rs. million) September – 14 September – 13 March – 14 Loans disbursed 4,271 2,509 6,306 No. of Customer Contracts (Nos) 30,903 20,673 56,868 Outstanding loan book 16,815 10,712 13,550 Total income 1,442 920 2,125
Slide 30: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Half year ended Half year ended Year ended Particulars (Rs. million) September – 14 September – 13 March – 14 Total income 561 490 1,112 Net premium 3,606 3,199 7,384 PBT 265 254 638 PAT 175 168 420 No. of Policies for the Period (nos.) 525,614 462,421 1,068,577 No
Slide 31: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Half year ended Half year ended Year ended Particulars (Rs. in Million) September – 14 September – 13 March - 14 Revenue from operations 28,444 24,505 52,753 Other income 149 108 253 Total Revenue 28,593 24,613 53,006 Expenses: Employee benefits expense 2,755 2,3
Slide 32: Consolidated Balance Sheet
Consolidated Balance Sheet As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,128 1,127 1,127 b) Reserves and Surplus 55,636 49,160 51,810 Shareholders' funds 56,764 50,287 52,937 Minority Interest 418 304
Slide 33: Consolidated Balance Sheet (Cont’d)
Consolidated Balance Sheet (Cont’d) As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 ASSETS Non-current assets a) Fixed Assets 1,143 1,206 1,287 b) Non-current investments 4,441 3,135 3,790 c) Deferred tax assets (Net) 3,561 2,500 3,254 d) Long-term loans and advanc
Slide 34: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Half year ended Half year ended Year ended Particulars September – 14 September – 13 March – 14 RONW (Avg. Net Worth) 13.7% 17.7% 18.6% Debt / Equity 4.69:1 4.63:1 4.70:1 Capital Adequacy 17.9% 19.1% 18.0% Tier I 15.5% 16.1% 15.5% Tier II 2.4% 3.0% 2.
Slide 35: Spread Analysis
Spread Analysis Figures on standalone basis Half year ended Half year ended Year ended September – 14 September – 13 March – 14 Total Income / Average Assets 16.5% 17.1% 17.7% Interest / Average Assets 7.6% 7.4% 7.8% Gross Spread 8.9% 9.7% 9.9% Overheads / Average Assets 3.0% 3.2% 3.3% Write offs &
Slide 36: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) September – 14 September – 13 March – 14 Gross Non - Performing Assets 21,314 12,223 14,057 Less: NPA Provisions 11,188 6,682 8,301 Net Non – Performing Assets 10,126 5,541 5,756 Total Assets (Incl. NPA Provision) 339,884 296,104 318
Slide 37: Key Risk Management Practices
Key Risk Management Practices Transforming rural lives across the country 37
Slide 38: Conservative Risk Management Policies
Conservative Risk Management Policies Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL 6 and <= 18 10% > 5 and <= 11 10% > 18 and <= 30 20% > 11 and <= 24 50% > 30 and <= 54 30% > 24 months 100% > 54 months 50% Key Risks & Management Strategies Key Risks Management Strategies
Slide 39: Disclaimer
Disclaimer This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Mahindra & Mahindra Financial Services Limited (the “Company”), nor shall it or any part of it or
Slide 40: Thank You
Thank You Transforming rural lives across the country 40
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