Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY2013 Earnings Presentation
41 slides from Mahindra & Mahindra Financial Services's earnings presentation, June 2012
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update June 2012
Mahindra & Mahindra Financial Services Limited Quarter Result Update JUNE - 2012 1
Slide 2: Company overview
Company overview 2
Slide 3: Background
Background Mahindra & Mahindra Financial Services Limited (M&MFSL) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 421 billion)*, one of India’s leading tractor and utility vehicle manufacturers M&MFSL (Mcap: Rs 70 billion)* is one of India’s leading non-banking finance companies focu
Slide 4: M&MFSL Group structure
M&MFSL Group structure Mahindra and Mahindra Limited 56% M&MFSL 87.5% , balance 100% 12.5% with National 49% 100% Housing Bank Mahindra Finance Mahindra Rural Mahindra Insurance USA LLC Mahindra Business & Housing Brokers Limited (Joint venture Consulting Services Finance Limited (“MIBL”) with Rabob
Slide 5: Shareholding pattern
Shareholding pattern (as on June 30, 2012) Public ESOP Trust 5.2% 1.2% Mutual Funds 5.1% FII Promoters 32.5% 56.0% Incorporated in 1991 and initially provided financing to dealers of Mahindra & Mahindra Limited The Company also issued shares to the ESOS trust in December 2005 The Company came
Slide 6: Industry overview
Industry overview 6
Slide 7: Vehicle finance industry continues to shine with rural sales
Vehicle finance industry continues to shine with rural sales Growth in New Vehicle Finance Disbursements CAGR FY11- (Rs. billion) FY09E FY10E FY11E FY12P FY16P FY16P Cars 260 349 502 523 1154 18% Utility Vehicles 80 108 158 183 335 16% Commercial Vehicles 194 272 402 496 996 20% Two-Wheelers 72 84 9
Slide 8: Domestic Car and UV Industry to grow at a CAGR of 14-16%
Domestic Car and UV Industry to grow at a CAGR of 14-16% Long term growth to be driven by increase in income of households Addressable market is expected to grow at a CAGR of 14% to reach 122 Mn households in 2015-16 from 64 Mn in 2010-11 2005-06 2010-11 2015-16P Small Cars segment is expected
Slide 9: Overall Demand Drivers
Overall Demand Drivers Increase in affordability Growth in Addressable Market New Launches Increase in dealerships and access to Finance Reduction in holding period, which increases the demand for second vehicles Growth in Economic Activity Infrastructure development, structural change
Slide 10: Business Strategies
Business Strategies 10
Slide 11: Business Strategies
Business Strategies Grow market share in rural and semi urban & vehicle and automobile financing market Expand nationwide network of branches Diversify product portfolio Leveraging existing customers base through Direct Marketing Initiatives Continue to attract and retain talented employees Effectiv
Slide 12: Product portfolio and knowledge catering to rural and semi-urban markets
Product portfolio and knowledge catering to rural and semi-urban markets Vehicle Loans for auto and utility vehicles, tractors, cars , commercial vehicles and Financing construction equipments Pre-Owned Loans for pre-owned cars, multi-utility vehicles, tractors and commercial Vehicles vehicles I
Slide 13: Extensive branch network
Extensive branch network M&MFSL has an extensive branch network with presence in 24 states and 4 union territories in India through 615 offices as of June 30, 2012 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 5 18 11 8 20 7 40 1 58 15 53 21
Slide 14: Funding
Funding M&MFSL believes that its credit rating and strong brand equity enable it to borrow funds at competitive rates Total consortium size of Rs. 10 billion comprising several banks CRISIL Rating Outlook Fixed Deposit programme FAAA Stable Short term debt A1+ Stable Long term and Subordinated d
Slide 15: Source of Borrowing
Source of Borrowing (as on June 30, 2012) Figures on standalone basis Fund Mix on the basis of Investor profile Fund Mix on the basis of Instrument Insurance Banks for Co. & Assignment Assignment Institutions (Rs.20115 (Rs.20115 (Rs.14820 mn) CP, ICD mn) mn) 12% (Rs. 14788 12% 9% mn) 9% Bank Term Ot
Slide 16: Financial Information
Financial Information 16
Slide 17: Highlights for Q1-FY13 Vs Q1-FY12
Highlights for Q1- FY13 Vs Q1- FY12 Figures on standalone basis Rs.8,390 mn Rs.1,610 mn Rs.48,439 mn 50% 58% 26% Rs.5,603 mn Rs.1,022 mn Rs.38,344 mn Total Income Profit After Tax Value of Assets Financed Assets under Management have increased from Rs.157,717 Mn to Rs.217,441 Mn year-on-year basis
Slide 18: Highlights for Q1-FY13 Vs Q1-FY12
Highlights for Q1- FY13 Vs Q1- FY12 Figures on standalone basis Rs.15.68 Rs.31,057 mn Rs.4,915 mn 57% 20% 43% Rs.9.97 Rs.3,443 mn Rs.25,906 mn EPS Net Worth Net Interest Income 18
Slide 19: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 12 June – 11 March – 12 Income from operations 8,351 5,538 27,681 Other income 39 65 265 Total income 8,390 5,603 27,946 Interest cost 3,475 2,160 11,203 Administrative cost 2,437 1,863 7,173 P
Slide 20: Standalone Balance Sheet
Standalone Balance Sheet As on As on As on LIABILITIES (Rs. million) June – 12 June – 11 March – 12 Shareholder’s funds 31,135 25,944 29,510 Secured loans 112,120 86,651 117,660 Unsecured loans 37,279 16,503 21,951 Current liabilities & provisions 19,244 16,968 16,495 TOTAL 199,778 146,066 185,616 A
Slide 21: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 12 June – 11 March – 12 Loans disbursed 707 592 2,668 No. of Customer Contracts (Nos) 8,480 5,759 33,172 Outstanding loan book 5,897 3,665 5,352 Total income 275 170 857 PBT 33 23 161 PAT 2
Slide 22: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 12 June – 11 March – 12 Total income 180 89 465 Net premium 1,209 1,001 4,138 PBT 104 26 201 PAT 70 17 135 No. of Policies for the Period (nos.) 158,969 146,130 703,730 No. of employees (nos.)
Slide 23: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 12 June – 11 March – 12 Income from operations 8,827 5,749 28,853 Other income 33 58 251 Total Income 8,860 5,807 29,104 Interest cost 3,587 2,185 11,399 Administrative cost 2,626 1,991 7,755
Slide 24: Consolidated Balance Sheet
Consolidated Balance Sheet As on As on As on LIABILITIES (Rs. million) June – 12 June – 11 March – 12 Shareholder’s funds 32,085 26,524 30,311 Minority Interest 80 49 77 Secured loans 120,878 89,370 124,650 Unsecured loans 37,041 16,387 21,814 Current liabilities & provisions 19,823 18,275 17,356 TO
Slide 25: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Quarter ended Quarter ended Full year ended Segments June–12 June–11 March–12 Auto/ Utility vehicles 31% 30% 31% Tractors 19% 22% 20% Cars 27% 28% 27% Commercial vehicles and 11% 12% 12% Construction equipments Pre-owned vehicles and others 12% 8% 10% 2
Slide 26: Break up of AUM
Break up of AUM As on As on As on Segments June – 12 June – 11 March – 12 Auto/ Utility vehicles (M&M) 28% 30% 30% Tractors (M&M) 20% 23% 20% Cars and Non M&M UVs & SCVs 32% 31% 31% Commercial vehicles and 13% 10% 12% Construction equipments Pre-owned vehicles and others 7% 6% 7% 26
Slide 27: Established track record
Established track record Figures on standalone basis Loans & Advances and Borrowings (Rs. million) Total Assets (Rs. million) Loans & Advances CAGR (FY10-FY12): 41.8% CAGR(FY10-FY12): 40.3% Borrowings CAGR (FY10-FY12): 47.0% 1,91,282 1,99,778 1,74,963 1,85,616 1,49,399 1,39,611 1,36,830 1,23,957 96,
Slide 28: Established track record
Established track record Figures on standalone basis ROA (Avg. Assets) (%) RONW (Avg. Net Worth) (%) 4.1% 4.1% 3.9% 2.9% 2.8% 21.5% 22.0% 22.8% 19.6% 15.7% FY10 FY11 FY12 1QFY12 1QFY13 FY10 FY11 FY12 1QFY12 1QFY13 Gross NPA and Net NPA to Total Assets (%) Leverage ratio 4.7 4.8 6.4% 3.9 4.0 4.6% 3.7
Slide 29: Summary of Results
Summary of Results Figures on standalone basis Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 12 June – 11 March – 12 Total Income 8,390 5,603 27,946 Profit before tax 2,395 1,513 9,253 Profit after tax 1,610 1,022 6,201 Dividend (%) -- -- 140 Net Worth 31,057 25,906 29,440
Slide 30: Ratio Analysis
Ratio Analysis Figures on standalone basis Quarter ended Quarter ended Year ended June – 12 June – 11 March – 12 PBT/Total Income 28.5% 27.0% 33.1% PBT/Total Assets 4.0% 4.2% 5.1% RONW (Avg. Net Worth) 19.6% 15.7% 22.8% Overheads/Total Assets 3.4% 3.8% 3.2% Debt / Equity 4.81:1 3.98:1 4.74:1 Capital
Slide 31: Spread Analysis
Spread Analysis Figures on standalone basis Quarter ended Quarter ended Year ended June – 12 June – 11 March – 12 Total Income / Average Assets 16.8% 16.2% 17.7% Interest / Average Assets 7.3% 6.2% 7.0% Gross Spread 9.5% 10.0% 10.7% Overheads / Average Assets 3.5% 4.0% 3.8% Write offs & NPA provisio
Slide 32: NPA
NPA Figures on standalone basis Particulars (Rs. million) June – 12 June – 11 March – 12 Gross Non - Performing Assets 7,639 6,776 5,543 Less: NPA Provisions 5,364* 5,403 4,324 Net Non – Performing Assets 2,275 1,373 1,219 Total Assets (Incl. NPA Provision) 201,034 147,304 186,633 Gross NPA to Total
Slide 33: Provisioning Norms
Provisioning Norms Duration (months) RBI Norms Duration (months) M&MFSL > 5 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% At M&MFSL NPA provisioning norms are more stringent than RBI norms 33
Slide 34: Technology initiatives and Employee management
Technology initiatives and Employee management 34
Slide 35: Technology initiatives
Technology initiatives Approximately 95% of our 615 offices are connected to the centralised data centre in Mumbai Through hand held devices connected by GPRS to the central server, we transfer data which provides – Prompt intimation by SMS to customers – Complete information to handle customer
Slide 36: Employee engagement & training
Employee engagement & training Training programs for employees on continuous basis. 5 days induction program on product knowledge, business processes and aptitude training. Mahindra Finance Academy for training prospective and present employees at 5 locations. Assessment & Development Centre
Slide 37: Key Risks & Management Strategies
Key Risks & Management Strategies Volatility in interest rates Matching of asset and liabilities Rising competition Increasing branch network Raising funds at competitive rates Maintaining credit rating & improving asset quality Dependence on M&M Increasing non-M&M Portfolio Occurrence of
Slide 38: Regulatory Changes
Regulatory Changes RBI finalized its much awaited guidelines on securitization & assignment transaction of standard assets and issued final guidelines on 07th May 2012 please visit http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7184&Mode=0 RBI released revised guidelines on Priority Sect
Slide 39: New Securitisation/ Assignment Guidelines
New Securitisation/ Assignment Guidelines As per new guidelines, securitisation route will be preferred over assignment route Base rate is not applicable to securitisation deals Final guidelines on Priority sector classification based on MV Nair committee recommendation released on 20th July 2
Slide 40: 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 41: Thank you
Thank you 41 Mahindra Finance
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