Manappuram Finance Limited · NSE:MANAPPURAM
Manappuram Finance — Q3 FY2017 Earnings Presentation
50 slides from Manappuram Finance's earnings presentation, March 2017
Slide 1: Investor Presentation March 2017
INVESTOR PRESENTATION MARCH 2017 Manappuram Finance Ltd @ 2015 1
Slide 2: Manappuram Finance Limited Investor Presentation
GOLD LOAN (LOAN AGAINST MICROFINANCE GOLD) MORTGAGE & HOUSING FINANCE MANAPPURAM FINANCE LIMITED INVESTOR PRESENTATION MARCH 2017 1 Manappuram Finance Ltd @ 2015 2
Slide 3: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 3
Slide 4: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 4
Slide 5: Quarterly Update: Q3 FY17 Key Result Highlights
QUARTERLY UPDATE: Q3 FY17 - KEY RESULT HIGHLIGHTS • Closing AUM at Rs 146 bn up 0.4 % q-q • Net profit up by 5.3% q-q at Rs 2,025.4 mn • ROA at 5.07% and NIM at 15.95% • EPS of Rs 9.63 per share, NAV per share Rs 38.15 • High capital adequacy of 22.7% (Tier 1 – 22.3%) Manappuram Finance Ltd @ 2017 5
Slide 6: Financial Details: Consolidated Profit & Loss Statement
FINANCIAL DETAILS: CONSOLIDATED PROFIT & LOSS STATEMENT Particulars (In Rs Mn) 9MFY 17 9MFY 16 YOY % Q3FY17 Q3FY16 YOY % Q2FY17 QOQ % FY16 Closing AUM (Rs in bn) 146 106 37.6% 146 106 37.6% 145 0.5% 114 Interest income 24,803.7 16,986.5 46.0% 8,977.3 6,130.0 46.4% 8,392.9 7.0% 23,490 Other Operating
Slide 7: Financial Details: Consolidated Balance Sheet
FINANCIAL DETAILS: CONSOLIDATED BALANCE SHEET Particulars (In Rs Mn) Q3FY17 Q3FY16 YOY % Q2FY17 QOQ % Cash & Bank Balances 5,845.3 6,847.6 -14.6% 6,285.9 -7.0% Investments 554.8 66.0 740.3% 50.5 998.0% Loans & Advances 145,546.2 106,053.1 37.2% 143,895.6 1.1% Fixed Assets 1,844.0 1,916.7 -3.8% 1,866
Slide 8: Result Analysis: AUM Update
RESULT ANALYSIS: AUM UPDATE Consolidated AUM AUM Break-up Product Wise 123,827 122,672 157 113,451 146 100,806 16,504 138 145 96,392 15,705 114 130 126 106 115 94 9,988 12,368 686 827 487 6,983 1,298 2,126 2,505 895 1,684 1,705 2,630 414 442 2,134 445 423 406 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY1
Slide 9: Result Analysis: Profitability Analysis
RESULT ANALYSIS: PROFITABILITY ANALYSIS Yields & Spread Analysis Cost of Funds & Profitability Analysis 23.8% 24.2% 24.6% 24.5% 24.6% 2,025 1,924 1,603 1,308 1,003 14.5% 15.5% 15.9% 15.8% 15.9% 10.6% 10.5% 10.4% 10.1% 9.9% Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Net Yie
Slide 10: Result Analysis: Operational Analysis
RESULT ANALYSIS: OPERATIONAL ANALYSIS Productivity (Rs mn) Opex to AUM (%) 3293 3293 3293 3293 3293 38.6 38.4 8.4% 35.4 7.7% 7.3% 30.0 31.3 6.9% 6.4% Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Average AUM per Branch No of Branches Gold Loan Customer Base (mn) & Avg. Ticket
Slide 11: Result Analysis: Asset Quality Update
RESULT ANALYSIS: ASSET QUALITY UPDATE Gross NPA & Net NPA – Gold Loan (Rs mn) Gross & Net NPA % 2.3% 2,881 2.0% 2,464 1.1% 1.0% 1,189 0.9% 0.9% 1,075 0.7% 0.8% 0.7% 881 978 951 948 0.6% 759 742 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Highlights For the Quarter Key Highl
Slide 12: Segment Wise Update: Gold Business AUM Growth Analysis
SEGMENT WISE UPDATE: GOLD BUSINESS - AUM GROWTH ANALYSIS Gold Business - AUM & Disbursements Net Growth 13,014 12,645 149 121 132 124 123 10,652 10,433 113 101 109 96 90 6,435 5,053 4,587 1,153 -350 -1,158 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 AUM (Rs bn) Disbursement
Slide 13: Quarterly Update: Liability Mix
QUARTERLY UPDATE: LIABILITY MIX Borrowings as on Dec 31, 2016 Sources of Funds Amount (Rs Mn) Commercial Subordinated Others Bond 0.1% NCD 27,149 Paper 19.5% 1.1% NCD Bank Finance 69,722 22.2% Commercial Paper 23,777 Subordinated Bond 1,284 Bank Finance Others 179 57.1% Total 122,110 Marginal Cost O
Slide 14: Subsidiary Information: Asirvad Microfinance Q3 FY17 Result Highlights
SUBSIDIARY INFORMATION: ASIRVAD MICROFINANCE – Q3 FY17 RESULT HIGHLIGHTS AUM Yields & Spread Analysis 15,705 16,504 25.3% 24.0% 23.9% 23.9% 23.6% 12,368 9,988 6,983 6,382 4,428 15.6% 4,697 4,540 14.1% 14.0% 13.1% 12.7% 2,849 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q3FY16 Q4FY16 Q1FY17 Q2FY17 Q3FY17 AUM (
Slide 15: Subsidiary Information: Asirvad Microfinance Q3 FY17 Result Highlights
SUBSIDIARY INFORMATION: ASIRVAD MICROFINANCE – Q3 FY17 RESULT HIGHLIGHTS Particulars (In Rs Mn) 9MFY 17 9MFY 16 YOY % Q3FY17 Q3FY16 YOY % Q2FY17 QOQ % FY16 Interest income 2,161.59 825.77 161.8% 890.50 361.39 146.4% 684.88 30.0% 1,261.41 Other Operating Income 295.83 122.65 141.2% 98.81 44.36 122.7%
Slide 16: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 16
Slide 17: Company Overview: Brief Overview
COMPANY OVERVIEW: BRIEF OVERVIEW ▪ Incorporated in 1992, the company has been one of India’s leading gold loans NBFCs. STRONG PEDIGREE ▪ Promoted by Mr. V.P. Nandakumar (current MD & CEO) whose family has been involved in gold loans since 1949. ▪ One of the largest listed players in the gold loan bu
Slide 18: Company Overview: Pan India Presence & Distribution Network
COMPANY OVERVIEW: PAN INDIA PRESENCE & DISTRIBUTION NETWORK ▪ Extensive Pan India presence through 3,293 branches spread across 23 States and 4 Union territories in India. ▪ Strong Presence in Rural & Semi Urban markets as more than 60% of the Gold is held in Rural India. ▪ Focus on diversified pres
Slide 19: Company Overview: Shareholding Summary
COMPANY OVERVIEW: SHAREHOLDING SUMMARY Share Price Performance Market Data As on 17.03.2017 120 100 Market Capitalization (Rs mn) 77,875.7 80 Price (Rs) 92.5 60 40 No. of Shares Outstanding (mn) 841.6 20 Face Value (Rs) 2.0 0 52 Week High-Low (Rs) 106.7 – 33.8 Source – BSE % Shareholding – December
Slide 20: Company Overview: Experienced Management Team
COMPANY OVERVIEW: EXPERIENCED MANAGEMENT TEAM Mr. V. P. Nandakumar Mr. B.N. Raveendra Babu Mr. Kapil Krishan Managing Director & CEO Executive Director Group Chief Financial Officer ▪ 24 years experience with ▪ Chief Promoter of ▪ Director since July 1992 organizations such as Manappuram Group ▪ Wor
Slide 21: Company Overview: Corporate Governance – Strong Board of Directors
COMPANY OVERVIEW: CORPORATE GOVERNANCE – STRONG BOARD OF DIRECTORS ▪ Former Chairman of HDFC Bank, former Deputy Governor of Reserve Bank of India, former Chairman of Mr Jagdish Capoor UTI and BSE Ltd CHAIRMAN, INDEPENDENT & ▪ Currently, he is on the Board of Indian Hotels Company Limited, Assets Ca
Slide 22: Company Overview: Corporate Governance – Strong Board of Directors
COMPANY OVERVIEW: CORPORATE GOVERNANCE – STRONG BOARD OF DIRECTORS Mr. Rajiven V. R. ▪ He holds a Bachelor of Science degree and has completed his LLB from Govt. Law College, Trivandrum INDEPENDENT & ▪ Shri Rajiven brings to the Board a wealth of experience in areas like Leadership and Staff managem
Slide 23: Company Overview: Dividend History
COMPANY OVERVIEW: DIVIDEND HISTORY – CONSISTENT DIVIDEND PAYOUT Dividend Per Share & Dividend Pay Out as % of PAT over the last decade 60.5% 66.9% 55.9% 44.9% 19.8% 19.5% 18.6% 21.2% 10.4% 11.7% 13.9% 7.9% 1.80 1.80 1.80 1.50 1.50 0.60 0.09 0.10 0.13 0.03 0.04 0.03 FY05 FY06 FY07 FY08 FY09 FY10 FY11
Slide 24: Company Overview: Strong Brand Recall
COMPANY OVERVIEW: STRONG BRAND RECALL ▪ Strong Brand Equity built over the years. Have gained mileage from Vikram Akshay Kumar Jeeth our celebrity endorsements in terms of enhanced visibility and growing business. ▪ Brand Manappuram is endorsed by well recognized film industry icons from all major r
Slide 25: Company Overview: Strong Systems and Internal Processes
COMPANY OVERVIEW: STRONG SYSTEMS AND INTERNAL PROCESSES In-house IT Infrastructure ▪ Availability of accurate and real-time information aids in faster decision making and reduced turnaround time resulting in improved loan disbursement facility. Asset Evaluation & Appraisal Risk Significantautomati
Slide 26: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 26
Slide 27: Understanding Our Evolution: Phase FY08-FY12
UNDERSTANDING OUR EVOLUTION PHASE 1 – FY08- FY12 Strong Growth Witnessed…. ▪ Higher Loan To Value (LTV) up to 85% 2908 ▪ Lower Cost of Funds due to Eligibility under 150 3000 Priority Sector Lending 2064 116 2250 ▪ Supported by Buoyant Economic Growth 100 75 ▪ Long Tenure Products supported by Risin
Slide 28: Understanding Our Evolution: Phase FY12-FY14
UNDERSTANDING OUR EVOLUTION PHASE 2 – FY12- FY14 Regulatory Overhang Impact…. Regulatory Changes by RBI- 150 ▪ Mar - 2012 : Removal of Priority Sector 116 Lending Status – led to Higher Borrowing 100 Cost. 100 82 75 ▪ Mar - 2012 : Cap on LTV to not exceed more than 60% - 50 ▪ Weakened the Competitiv
Slide 29: Understanding Our Evolution: Phase FY15 Onwards
UNDERSTANDING OUR EVOLUTION PHASE 3 – FY15 ONWARDS On a Revival Path….. Sept – 2013 : Regulatory Changes by RBI- 150 AUM (Rs Bn) 116 ▪ Increased the loan-to-value (LTV) ratio for gold 100 106 96 loans to 75 per cent - 100 82 ▪ Resulting into Level Playing Field for NBFCs vis-a-vis the commercial ban
Slide 30: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 30
Slide 31: Business Strategy – Key Highlights
BUSINESS STRATEGY – KEY HIGHLIGHTS CURRENT BUSINESS STRATEGY STRENGTHEN THE CORE ADDITION OF SYNERGISTIC NEW BUSINESS – BUSINESS GOLD LOAN BUSINESS SEGMENTS ▪ De-Linking the Gold Business from Gold Prices ▪ Leveraging the Strong Brand Equity & Existing Retail Customer Base ▪ Focus on Branch Activati
Slide 32: Business Strategy: Gold Loan Business – De-linked from Gold Prices
BUSINESS STRATEGY: GOLD LOAN BUSINESS – DE-LINKED FROM GOLD PRICES Additional 2 month for Earlier Scenario - 12 month Long Tenure Product 12 months – Single Product Offering Auction Gold value 100 If the Customer does not LTV 75% pay or close the Loan, Gold Loan 75 then there is likely loss of Inter
Slide 33: Business Strategy: Gold Loan Business – Reaching Out to the Customer
BUSINESS STRATEGY: GOLD LOAN BUSINESS – REACHING OUT TO THE CUSTOMER Strategic initiatives to drive business performance - ▪ Increased marketing initiatives across branches and key markets. ▪ Significantly enhanced our marketing spend with growing BTL and ATL activities. ▪ Increased incentives and b
Slide 34: Business Strategy: Introducing New Synergistic Product Segments
BUSINESS STRATEGY: INTRODUCING NEW SYNERGISTIC PRODUCT SEGMENTS CAPITAL AVAILABILITY STRONG BRAND EQUITY ADDITION ON NEW ▪ Current Capital Adequacy at SYNERGISTIC PRODUCT EXISTING RETAIL CUSTOMER 22.7% compared to the BASE SEGMENTS – minimum 15% as stipulated by the RBI. PAN INDIA DISTRIBUTION ▪ MIC
Slide 35: Business Strategy: Diversify into Synergistic Product Segments
BUSINESS STRATEGY: DIVERSIFY INTO SYNERGISTIC PRODUCT SEGMENTS EACH NEW BUSINESS HAS A DEDICATED BUSINESS HEAD AND A SEPARATE OPERATING TEAM WITH EXTENSIVE AND RELEVANT INDUSTRY EXPERIENCE. NEW BUSINESSES EXPECTED TO CONTRIBUTE UPTO 20 - 25% OF TOTAL AUM IN THREE YEARS. MICROFINANCE AFFORDABLE HOUSI
Slide 36: Business Strategy: New Product Segment Profile
BUSINESS STRATEGY: NEW PRODUCT SEGEMENT PROFILE Particulars (As of Dec 2016) Microfinance Housing Finance CV AUM (Rs mn) 16,504 2,630 2,505 Branch Network 697 34 46 * Number of States 15 6 9 Average Ticket Size (Rs lacs) 0.2 12.7 5.87 Average Yield (%) 25.0% 15.3% 18.9% * CV Branches are co-located
Slide 37: Business Strategy: Asirvad Microfinance – Geographical Presence
BUSINESS STRATEGY: ASIRVAD MICROFINANCE – GROPRAPHICAL PRESENCE ▪ Having presence through 697 branches spread across 15 States and 2 Union territories in India. ▪ Branch network has enabled AUM diversification with South now contributing 73% of the total AUM as compared to 79% in FY16. AUM Break-up
Slide 38: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 38
Slide 39: Technology Strategy Overview: Exploring New Age Gold Loan Based Fintech Opportunities
TECHNOLOGY STRATEGY OVERVIEW: EXPLORING NEW AGE GOLD LOAN BASED FINTECH BUSINESS OPPORTUNITIES INNOVATE (STRATEGIC) Out of the box innovative projects to make MAFIL ready/relevant to face future challenges/changes. Eg - OGL, Mobility project, NetLockers etc DIFFERENTIATE (TACTICAL) Business differen
Slide 40: Understanding Technology Initiatives: Gold Loan Based Fintech Opportunities
UNDERSTANDING TECHNOLOGY INITIATIVES: EXPLORING NEW AGE GOLD LOAN BASED FINTECH BUSINESS OPPORTUNITIES GOLD LOANS - IT/FINTECH BUSINESS STRATEGY WEB APPLICATION Future Gold Loan based FinTech business opportunities under development: ▪ Web platform based ▪ Successfully executed B2C Self Service Plat
Slide 41: Technology Initiatives: Technological Innovations to Enhance Value Proposition
TECHNOLOGY INITIATIVES: TECHOLOGICAL INNOVATIONS TO ENHANCE VALUE PROPOSITION CENTRALIZED IOT BASED KEYLESS ELOCKERS TIE-UPS WITH E-COMMERCE PLATFORMS These payment platforms have been integrated with our Online Payment System enabling the customer to make Gold loan payments through (mRupee wallet/I
Slide 42: Technology Initiatives: Implementation of New Technologies
TECHNOLOGY INITIATIVES: IMPLEMENTATION OF NEW TECHNOLOGIES - STAYING AHEAD OF THE CURVE MAJOR BUSINESS DIFFERENTIATORS COMPLETED RECENTLY TIE UP WITH PAYTM/ M-PESA/M RUPEE/ITZ CASH TIE UP WITH RIA AGENCIES FOR EASY FOREIGN MONEY TRANSFER VALUE ADD – Brand positioning/Collection/Lead Enables Foreign
Slide 43: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 43
Slide 44: Industry Overview: India Gold Market
INDUSTRY OVERVIEW: INDIA GOLD MARKET India possesses over ~20,000 tonnes of gold worth more than US$ 800 bn. Organized gold loan sector penetration is Just 3% ! ▪ India is the largest consumer of gold jewellery in the world - Together with China, it makes up over half the global consumer demand for
Slide 45: Industry Overview: Key Drivers for Gold Loan Market
INDUSTRY OVERVIEW: KEY DRIVERS FOR GOLD LOAN MARKET Advantage Consumer Advantage Lender ▪ Idle gold can be monetized for productive ▪ Collateral / Security is with the lender – No purposes. requirement to reposes. ▪ Prompt Disbursement - Faster turnaround ▪ No Liquidity Issues – Gold is one of the t
Slide 46: Industry Overview: Competitive Advantage – Gold Loan NBFCs
INDUSTRY OVERVIEW: COMPETITIVE ADVANTAGE - GOLD LOAN NBFC’S Parameter Gold loan NBFC's Banks Moneylenders LTV Up to 75% Lower LTV than NBFC's Higher than 75% Processing charges are much Processing Fees No / Minimal Processing Fees No Processing Fees higher compared to NBFC's Usually in the range of
Slide 47: Discussion Summary
DISCUSSION SUMMARY ▪ QUARTERLY UPDATE ▪ ABOUT US – COMPANY OVERVIEW ▪ UNDERSTANDING OUR EVOLUTION ▪ BUSINESS STRATEGY INITIATIVES ▪ TECHNOLOGY STRATEGY & KEY INITIATIVES ▪ INDUSTRY OVERVIEW ▪ ANNEXURE Manappuram Finance Ltd @ 2017 47
Slide 48: Company Overview: Financial Summary
COMPANY OVERVIEW: FINANCIAL SUMMARY AUM & Disbursements Yields, Cost of Funds & Spread Analysis CAGR: Disbursements – 4.4% 375,863 27.3% 316,982 21.7% 23.2% 23.0% 23.0% 246,830 205,163 202,925 14.7% 12.9% 13.2% 12.3% 12.0% 116,308 99,563 114,330 95,935 81,631 12.6% 8.5% 10.3% 10.7% 11.0% FY12 FY13 F
Slide 49: Company Overview: Operational Summary
COMPANY OVERVIEW: OPERATIONAL SUMMARY Branch Distribution AUM Break-up (Region Wise) CAGR: Branch Addition – 3.2% 2,064 2,908 3,295 3,293 3,293 1,15,551 99,563 81,631 92,693 100,806 5% 5% 5% 5% 6% 4% 6% 7% 8% 8% 12% 11% 11% 11% 11% 8% 11% 13% 13% 12% 10% 14% 14% 14% 15% 5% 8% 10% 11% 15% 73% 70% 70%
Slide 50: For Further Queries
FOR FURTHER QUERIES: DISCLAIMER : This presentation and the contents therein are for information purposes only and does not and should not construed to be any investment or legal advice. Any action taken or transaction pursued Mr. Kapil Krishan based on the basis of the information contained herein