Arman Financial Services Limited · NSE:ARMANFIN
Arman Financial Services — Q3 FY2020 Earnings Presentation
39 slides from Arman Financial Services's earnings presentation, February 2020
Slide 1: Arman Financial Services Ltd. Q3 FY20 Investor Presentation
INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Q3 FY20 - Investor Presentation February 2020
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 – Q3 FY20 13 Liability Overview 16 Company Overview 24 Product Overview 28 Annexures
Slide 4: Financial Performance Update – Q3 & 9M FY20
Financial Performance Update – Q3 & 9M FY20
Slide 5: Q3 & 9M FY20 – Financial Performance Highlights
Q3 & 9M FY20 – Financial Performance Highlights ✓ Total AUM increased by 41% YoY to INR 8,142 Mn (Q3 FY19 AUM: INR 5,796 Mn) ✓ Total Disbursements Increased by 6% YoY to INR 2,241 Mn in Q3 FY20; and 14% YoY to INR 6,444 Mn in 9M FY20 ✓ Shareholders Equity Stood at INR 1,680 Mn in Q3 FY20 (BVPS is IN
Slide 6: Q3 & 9M FY20 – Consolidated Profit & Loss Statement
Q3 & 9M FY20 – Consolidated Profit & Loss Statement As per IND-AS Particulars (INR Mn) Q3 FY20 Q3 FY19 YoY (%) 9M FY20 9M FY19 YoY (%) Asset Under Management 8,142 5,796 41% 8,142 5,796 41% Disbursements 2,241 2,112 6% 6,444 5,631 14% Shareholder’s Equity * 1,680 1,178 43% 1,680 1,178 43% Income fro
Slide 7: Q3 & 9M FY20 – Microfinance “Namra” Performance Update
Q3 & 9M FY20 – Microfinance “Namra” Performance Update Particulars (INR Mn) Q3 FY20 Q3 FY19 YoY (%) 9M FY20 9M FY19 YoY (%) Asset Under Management 5,826 4,016 45% 5,826 4,016 45% ❖ Witnessed strong traction in AUM (+45 YoY) backed by an increase in Disbursements 1,605 1,543 4% 4,729 4,239 12% custom
Slide 8: Q3 FY20 - Microfinance Performance Update
Q3 FY20 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 395 5,826 375 5,553 1,729 5,137 1,657 1,605 324 4,837 1,543 1,395 4,016 252 267 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3
Slide 9: Q3 FY20 – Microfinance Performance Update
Q3 FY20 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 25.0% 25.6% 26.0% 26.0% 24.0% 50.7% 46.4% 40.7% 43.3% 36.9% 15.2% 14.8% 15.0% 16.0% 13.0% Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Yields % NIM % Cost / Income (%) Asset Quality
Slide 10: Q3 & 9M FY20 – Standalone Performance Update (2W & MSME)
Q3 & 9M FY20 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q3 FY20 Q3 FY19 YoY (%) 9M FY20 9M FY19 YoY (%) ❖ Witnessed strong growth in MSME AUM (+72% YoY) to INR 1,330 Mn Asset Under Management 2,348 1,791 31% 2,348 1,791 31% • No. of loans disbursed increased by 47% YoY Disburse
Slide 11: Q3 FY20 - MSME Performance Update
Q3 FY20 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 1,330 368 363 1,257 117 319 1,100 299 105 992 251 92 78 775 64 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Asset Quality Yi
Slide 12: Q3 FY20 - 2W Performance Update
Q3 FY20 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 1,018 319 66 1,016 1,017 274 64 64 230 988 207 205 63 960 60 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q3 FY20 Asset Quality Yields
Slide 13: Liability Overview
nee ‘Liability Overview
Slide 14: Efficient Liability Management
Efficient Liability Management Funding profile is well diversified with increase in share of funds from Banks/SFB’s and NCDs FY19 - Borrowing Mix % Q3 FY20 - Borrowing Mix % INR 5,885 Mn INR 7,543 Mn * Banks & SFBs 3% 2% 10% 16% NABARD 28% 12% 37% NBFC / FI 9% Securitization 5% 3% NCD 42% 33% Subord
Slide 15: Lending partners
Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners 22 15
Slide 16: Company Overview
Company Overview
Slide 17: Key Strengths
Key Strengths Genesis Robust Risk Management Framework ▪ Arman Financial Services (“Arman”) is a diversified NBFC ▪ Superior Asset Quality – GNPA: 1.2%; NNPA: 0.5% (Q3 FY20) focusing on large under-served rural & semi-urban retail markets ▪ Consistent rating upgrades backed by strong financial & ope
Slide 18: Business Progression
Business Progression Company Disbursement Raised PE Expanded to Crosses 100 crosses 750 Cr; incorporated. funding from Maharashtra, branches across 5 100% Cashless Started bill Launched 2W Incofin; MP, UP & states & 3 products; disbursements; discounting & Loans Disbursement Uttarakhand; Disbursemen
Slide 19: Product Snapshot
Product Snapshot • 27 years of existence • Active customer base of 4.36 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 71% 16% 12% 1% (in Pilot Stage) LTV Unsecured Ca
Slide 20: 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 21: Strong Growth in AUM & Disbursements
Strong Growth in AUM & Disbursements….. 8000 Total AUM (INR Mn) 8000 • Diversified portfolio of 8,142 Mn in Q3 FY20 split between – 6,847 50% 7000 7000 • Microfinance: INR 5,826 Mn (71%), 14% 115%# • 2-Wheeler Loans: INR 1,018 Mn (13%) 6000 6000 4,532 15% 17% • MSME Loans: INR 1,330 Mn (16%) 5000 50
Slide 22: 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
Slide 23: Shareholding Pattern
Shareholding Pattern SHAREHOLDING – 31st December 2019 Promoters, 27.7% Public, 49.9% SAIF Partners, 22.4% 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 22.4% ▪ Mr. Mridul Arora, MD at SAIF Partners
Slide 24: Product Overview
MSME EOANS )S Product Overview
Slide 25: Product Overview: Microfinance
Product Overview: Microfinance Product Overview FY19 – Key Metrics (Mn) ▪ JLG model with small ticket loans (Avg. Ticket Size – INR 4,837 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) ▪
Slide 26: 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
Slide 27: 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 & Maharasthra, with 35 branches • Feet-on-Stre
Slide 28: 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
Slide 29: Annexures
Ess to INCLUSION 1 = Annexures
Slide 30: 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 7000 4,837 6000 2.0 1.70 5000 1.5 1.33 3,170 4000 0.80 Demonetization 1.0 0.62 0.74 5,896 3000 4,001 2000 0.5 1,206 1,239 2,080 1,585 1000
Slide 31: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency MFI AUM Mix (%) Demonetization 1% 1% 6% 2% 61% 8% 56% 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
Slide 32: 2W Loans: 5-Year Performance
2W Loans: 5-Year Performance Yields (%) & NIM (%) Trend Arman 2W AUM/ has seen steady growth over FY14-19 1200.0 1000.0 35.0% 32.1% 30.4% 800.0 30.0% 25.7% 24.9% 24.3% 25.0% 600.0 20.0% 1,017 900 20.4% 19.6% 400.0 738 18.4% 15.0% 10.0% 14.8% 493 555 12.2% 200.0 457 5.0% 0.0% 0.0 FY15 FY16 FY17 FY18
Slide 33: MSME Loans: 3-Year Performance
MSME Loans: 3-Year Performance Disbursement Growth AUM Growth 16,284 1200 CAGR: 83% CAGR: 115% 992 15000 1000 12000 9,756 800 9000 600 461 6000 962 400 527 3000 1,054 200 61 0 64 0 FY17 FY18 FY19 FY17 FY18 FY19 Arman MSME disbursement (INR Mn) # of MSME cases disb. AUM (INR Mn) Total Income Growth Y
Slide 34: 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
Slide 35: 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,
Slide 36: 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
Slide 37: 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
Slide 38: 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
Slide 39: 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
Arman Financial Services — Q3 FY2020 Earnings Presentation on 6ix