Arman Financial Services Limited · NSE:ARMANFIN

Arman Financial Services — Q2 FY20 Earnings Presentation

43 slides from Arman Financial Services's earnings presentation, Dec 14, 2019

  1. Slide 1: Filing cover letter to stock exchanges

    \ Arman Financial Salvlces Limited 501-504, SAKAR Ill. OPP. OLD HlGH COURT, OFF. ASHRAM ROAD.AHMEDABAD-380 014. GUJARAT. iNDIA PH. :+91~79-40507000.27541989 FAX:+91-79-27543666 e-maii :finance@armanindia.cum Website:www‘armanindiafiom Date: December 14, 2019 To, T0, 355 Limited National Stock Exchang

  2. Slide 2: Investor Presentation FY19 - Dec 2019

    INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Investor Presentation - Dec 2019

  3. Slide 3: 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

  4. Slide 4: Contents

    CONTENTS 04 Performance Update – Q2 FY20 15 Liability Overview 18 Company Overview 26 Product Overview 30 Annexures

  5. Slide 5: Financial Performance Update – Q2 & H1 FY20

    Financial Performance Update – Q2 & H1 FY20

  6. Slide 6: Q2 & H1 FY20 – Financial Performance Highlights

    Q2 & H1 FY20 – Financial Performance Highlights  Total AUM increased by 46% YoY to INR 7,531 Mn (Q2 FY19 AUM: INR 5,147 Mn)  Total Disbursements Increased by 15% YoY to INR 2,315 Mn in Q2 FY20; and 19% YoY to INR 4,230 Mn in H1 FY20  Gross Total Income increased by 70% to INR 544 Mn in Q2 FY20; a

  7. Slide 7: Q2 & H1 FY20 – Consolidated Profit & Loss Statement

    Q2 & H1 FY20 – Consolidated Profit & Loss Statement As per IND-AS As per I-GAAP Particulars (INR Mn) Q2 FY20 Q2 FY19 YoY (%) H1 FY20 H1 FY19 YoY (%) Particulars (INR Mn) H1 FY20 H1 FY19 YoY (%) Asset Under Management 7,531 5,147 46% 7,531 5,147 46% Asset Under Management 7,597 5,191 46% Disbursement

  8. Slide 8: H1 FY20 – Balance Sheet (IND-AS)

    H1 FY20 – Balance Sheet (IND-AS) Consolidated Standalone Consolidated Standalone ASSETS Sep-19 Sep-19 LIABILITIES & EQUITY Sep-19 Sep-19 Financial Assets Equity Share capital 69.8 69.8 Cash & Bank Balance 1,091.8 101.0 Reserves & Surplus 1,394.6 984.5 Trade Receivables 90.2 47.5 Total Shareholders F

  9. Slide 9: Q2 & H1 FY20 – Microfinance “Namra” Performance Update

    Q2 & H1 FY20 – Microfinance “Namra” Performance Update Particulars (INR Mn) Q2 FY20 Q2 FY19 YoY (%) H1 FY20 H1 FY19 YoY (%) Asset Under Management 5,553 3,534 57% 5,553 3,534 57%  Witnessed strong traction in AUM (+57 YoY) backed by increase in Disbursements 1,729 1,535 13% 3,125 2,696 16% customer

  10. Slide 10: H1 FY20 – Microfinance Reconciliation to IND-AS

    H1 FY20 – Microfinance Performance Update – Reconciliation to IND-AS Particulars (INR Mn) H1 FY20 (IND-AS) H1 FY20 (I-GAAP) Chg (%) Particulars (INR Mn) H1 FY19 (IND-AS) H1 FY19 (I-GAAP) Chg (%) Gross Total Income 699.2 703.4 (1%) Gross Total Income 409.9 419.8 (2%) Finance Costs 314.0 323.6 (3%) Fi

  11. Slide 11: Q2 FY20 - Microfinance Performance Update

    Q2 FY20 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 375 5,553 1,729 5,137 1,657 324 4,852 1,535 1,543 1,395 4,064 255 267 3,534 211 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2

  12. Slide 12: Q2 FY20 – Microfinance Performance Update

    Q2 FY20 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 26.7% 25.6% 26.0% 25.2% 24.0% 48.8% 50.7% 46.2% 43.3% 40.7% 14.9% 14.8% 15.0% 13.5% 13.0% Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Yields % NIM % Cost / Income (%) Asset Quality

  13. Slide 13: Q2 & H1 FY20 – Standalone Performance Update (2W & MSME)

    Q2 & H1 FY20 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q2 FY20 Q2 FY19 YoY (%) H1 FY20 H1 FY19 YoY (%) 2,218 1,704 30% 2,218 1,704 30%  Witnessed strong growth in MSME AUM (+70% YoY) to INR 1,257 Mn Asset Under Management Disbursements 586 470 25% 1,105 856 29% • No. of loans

  14. Slide 14: H1 FY20 – Standalone Reconciliation to IND-AS

    H1 FY20 – Standalone Performance Update – Reconciliation to IND-AS Particulars (INR Mn) H1 FY20 (IND-AS) H1 FY20 (I-GAAP) Chg (%) Particulars (INR Mn) H1 FY19 (IND-AS) H1 FY19 (I-GAAP) Chg (%) Gross Total Income 339.5 329.2 3% Gross Total Income 209.0 201.2 4% Finance Costs 103.5 121.6 (15%) Finance

  15. Slide 15: Q2 FY20 - MSME Performance Update

    Q2 FY20 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 1,257 368 105 1,100 319 92 299 992 251 78 738 778 222 64 54 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Asset Quality Yield

  16. Slide 16: Q2 FY20 - 2W Performance Update

    Q2 FY20 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 1,018 1,017 64 64 335 63 60 248 242 988 220 218 966 55 960 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Asset Quality Yields %

  17. Slide 17: Liability Overview

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  18. Slide 18: Efficient Liability Management

    Efficient Liability Management Funding profile is well diversified with increasing share of NCDs, NABARD refinance & securitization Q4 FY19 - Borrowing Mix % Q2 FY20 - Borrowing Mix % • Well-diversified borrowing mix with increasing share of NCD’s, NABARD Refinance, Sub-ordinate Debt and Securitizat

  19. Slide 19: Lending partners

    Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners 22 18

  20. Slide 20: Company Overview

    Company Overview

  21. Slide 21: Key Strengths

    Key Strengths Genesis Robust Risk Management Framework  Arman Financial Services (“Arman”) is a diversified NBFC  Superior Asset Quality – GNPA: 1.2%; NNPA: 0.6% (Q2 FY20) focusing on large under-served rural & semi-urban retail markets  Consistent rating upgrades backed by strong financial & ope

  22. Slide 22: Business Progression

    Business Progression Company Raised PE Expanded to Crosses 100 Disbursement incorporated. funding from Maharashtra, branches across 5 crosses 750 Cr; Started bill Launched 2W Incofin; MP, UP & states & 3 products; 100% Cashless discounting & Loans Disbursement Uttarakhand; Disbursement disbursements

  23. Slide 23: Product Snapshot

    Product Snapshot • 27 years of existence • Active customer base of 4.05 lakh • Employee strength of 1,774 employees • Completely in-house operations – Sourcing, Credit & Collections Microfinance MSME Loans 2-Wheeler Loans Rural 2W Loans % of Total AUM 72% 16% 11% 1% (in Pilot Stage) LTV Unsecured Ca

  24. Slide 24: 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

  25. Slide 25: Strong Growth in AUM & Disbursements

    Strong Growth in AUM & Disbursements….. 8000 Total AUM (INR Mn) 80 00 • Diversified portfolio of 7,531 Mn in Q2 FY20 split between – 6,847 50% 7000 70 00 • Microfinance: INR 5,553 Mn (72%), 14% 115%# • 2-Wheeler Loans: INR 960 Mn (12%) 6000 60 00 4,532 15% 17% • MSME Loans: INR 1,257 Mn (16%) 5000 5

  26. Slide 26: 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 CAGR: 42% CAGR: 38% 2.6% 1,411 2.0% Demonetization 28.8% 28.7% 28.3% 25.5% 25.6% 1.6% 782 1.1% 780

  27. Slide 27: Shareholding Pattern

    Shareholding Pattern SHAREHOLDING - 11TH October 2019 * Fully Diluted (Post Conversion of CCD’s) Promoters, 31.2% Public, 47.6% SAIF Partners, 21.3% 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 21.3

  28. Slide 28: Product Overview

    MSME EOANS > Product Overview

  29. Slide 29: Product Overview: Microfinance

    Product Overview: Microfinance Product Overview FY19 – Key Metrics (Mn)  JLG model with small ticket loans (Avg. Ticket Size – INR 4,840 5,896 26,000) given to women borrowers for income generating activities such as Livestock, Dairy, Agri allied, Kirana Stores AUM (INR Mn) Disbursement (INR Mn) 

  30. Slide 30: Product Overview: 2W & Rural 2W Loans

    Product Overview: 2W & Rural 2W Loans Product Overview FY19 – Key Metrics (Mn)  Hypothecation (secured) loans given to self-employed / cash- 1,017 1,041 salaried customer in the informal segment in semi-urban / rural areas for a 2W AUM (INR Mn) Disbursement (INR Mn)  Currently operates only in Guj

  31. 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 2 states – Gujarat & MP; 34 branches • Feet-on-Street sales team mode

  32. Slide 32: 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

  33. Slide 33: Annexures

    Annexures

  34. 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 2.5 Demonetization 2.24 70 00 4,837 60 00 2.0 1.70 50 00 1.5 1.33 3,170 40 00 0.80 Demonetization 1.0 0.62 0.74 5,896 30 00 4,001 20 00 0.5 1,206 1,239 2,080 1,58

  35. Slide 35: Microfinance: 5-Year Performance

    Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency MFI AUM Mix (%) Demonetization 1% 1% 6% 2% 8% 56% 57% 18% 5% 20% 21% 53% 17% 48% 13% 21% 40% 39% 21% 100% 92% 27% 82% 72% 44% 31% FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19 C

  36. Slide 36: 2W Loans: 5-Year Performance

    2W Loans: 5-Year Performance Yields (%) & NIM (%) Trend Arman 2W AUM/ has seen steady growth over FY14-19 12 00.0 10 00.0 35 .0% 32.1% 30.4% 80 0.0 30 .0% 25.7% 24.9% 24.3% 25 .0% 60 0.0 20 .0% 1,017 900 20.4% 19.6% 40 0.0 738 18.4% 15 .0% 10 .0% 14.8% 493 555 12.2% 20 0.0 457 5.0 % 0.0 % 0.0 FY15 F

  37. Slide 37: MSME Loans: 3-Year Performance

    MSME Loans: 3-Year Performance Disbursement Growth AUM Growth 16,284 12 00 CAGR: 83% CAGR: 115% 992 15 000 10 00 12 000 9,756 80 0 90 00 60 0 461 60 00 962 40 0 30 00 1,054 527 20 0 61 0 64 0 FY17 FY18 FY19 FY17 FY18 FY19 Arman MSME disbursement (INR Mn) # of MSME cases disb. AUM (INR Mn) Total Inco

  38. Slide 38: P&L Statement – Consolidated

    P&L Statement – Consolidated Particulars (INR Mn) FY15 FY16 FY17 FY18 FY19 YoY (%) Revenue from Operations 296 407 536 780 1,405 80% Interest income 284 381 497 713 1,313 84% Other interest income 0 8 22 9 16 78% Income From Securitization 0 0 0 0 6 Interest income from Managed Assets 0 0 0 17 7 -59

  39. Slide 39: Balance Sheet – Consolidated

    Balance Sheet – Consolidated Equity & Liabilities FY15 FY16 FY17 FY18 FY19 Share Capital 69 119 119 69 70 Reserves & Surplus 323 385 441 500 723 Shareholder's Funds 392 505 560 569 792 Long Term Borrowings 223 458 482 2,221 2,534 Long Term Provisions 2 3 3 7 16 Non-Current Liabilities 225 461 484 2,

  40. Slide 40: P&L Statement – Standalone

    P&L Statement – Standalone Particulars (INR Mn) FY15 FY16 FY17 FY18 FY19 YoY (%) Revenue from Operations 152 159 166 273 469 72% Interest income 152 159 165 272 463 70% Income From Securitization 0 0 0 0 2 Other charges in respect of loans 1 0 1 1 4 300% Other Income 0 0 0 0 1 Total Revenue 153 159

  41. Slide 41: Balance Sheet – Standalone

    Balance Sheet – Standalone Equity & Liabilities FY15 FY16 FY17 FY18 FY19 Share Capital 69 69 69 69 70 Reserves & Surplus 274 287 313 333 406 Shareholder's Funds 343 357 382 402 476 Long Term Borrowings 74 16 0 283 676 Long Term Provisions 1 1 1 3 6 Non-Current Liabilities 75 17 1 286 682 Short-Term

  42. Slide 42: P&L Statement – Namra (NBFC-MFI Subsidiary)

    P&L Statement – Namra (NBFC-MFI Subsidiary) Particulars (INR Mn) FY15 FY16 FY17 FY18 FY19 YoY (%) Revenue from Operations 144 257 370 527 948 80% Interest income 132 203 329 441 850 93% Other interest income 0 4 15 21 14 -33% Income From Securitization 0 0 0 0 4 Interest income from Managed Assets 0

  43. Slide 43: Balance Sheet – Namra (NBFC-MFI Subsidiary)

    Balance Sheet – Namra (NBFC-MFI Subsidiary) Equity & Liabilities FY15 FY16 FY17 FY18 FY19 Share Capital 100 154 174 152 242 Reserves & Surplus 49 98 159 239 557 Shareholder's Funds 149 252 333 391 799 Long Term Borrowings 149 441 482 1,938 1,858 Long Term Provisions 0 2 1 4 10 Non-Current Liabilitie

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