Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY13 Earnings Presentation
42 slides from Mahindra & Mahindra Financial Services's earnings presentation, January 2013
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update
Mahindra & Mahindra Financial Services Limited Quarter Result Update DECEMBER - 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 553 billion)*, one of India’s leading tractor and utility vehicle manufacturers M&MFSL (Mcap: Rs 129 billion)* is one of India’s leading non-banking finance companies focused
Slide 4: M&MFSL Group structure
M&MFSL Group structure Mahindra and Mahindra Limited 51.2% 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 Ra
Slide 5: Shareholding pattern
Shareholding pattern (as on December 31, 2012) The Company came out with its IPO in February 2006 The Company issued 6.13 million shares to Qualified Institutional Buyers (QIBs) under QIP in February 2011, all at a cash price of Rs. 695/Share The Company issued 9.75 million shares to Qualified Insti
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: Auto Industry Sales (YTD)
Auto Industry Sales (YTD) April - November FY13 FY12 (Volume in ‘000) (Nos.) (Nos.) Passenger Vehicles (PVs) Passenger Cars / Vans 1395 1377 UVs 358 221 Commercial Vehicles (CVs) M&HCVs 179 214 LCVs 335 286 Three Wheelers 357 341 Source: Auto Monitor 8
Slide 9: 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 (Volu
Slide 10: 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 changes and governme
Slide 11: Business Strategies
Business Strategies 11
Slide 12: Business Strategies
Business Strategies Grow in rural and semi urban markets for vehicle and automobile financing Expand nationwide network of branches Leverage existing customers base through Direct Marketing Initiatives Diversify product portfolio Broad base Liability Mix Continue to attract, train and retain talente
Slide 13: 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 finance, e
Slide 14: 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 639 offices as of December 31, 2012 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 5 18 11 8 22 7 16 40 1 62 21 1
Slide 15: 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 debt
Slide 16: Source of Borrowing
Source of Borrowing (as on December 31, 2012) Figures on standalone basis Fund Mix on the basis of Investor profile Fund Mix on the basis of Instrument Total : Rs.196564 million Total : Rs.196564 million 16
Slide 17: Financial Information
Financial Information 17
Slide 18: Highlights for Q3-FY13 Vs Q3-FY12
Highlights for Q3- FY13 Vs Q3- FY12 Figures on standalone basis Rs.10,009 mn Rs.2,002 mn Rs.68,001 mn 35% 29% 16% Rs.7,414 mn Rs.1,547 mn Rs.58,857 mn Total Income Profit After Tax Value of Assets Financed Assets under Management have increased from Rs.194,581 Mn to Rs.256,451 Mn year-on-year basis.
Slide 19: Highlights for 9M-FY13 Vs 9M-FY12
Highlights for 9M- FY13 Vs 9M- FY12 Figures on standalone basis Rs.27,691 mn Rs.5,489 mn Rs.171,937 mn 42% 40% 21% Rs.19,476 mn Rs.3,924 mn Rs.141,721 mn Total Income Profit After Tax Value of Assets Financed 19
Slide 20: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 12 December – 11 March – 12 Revenue from operations 27,464 19,288 27,681 Other income 227 188 265 Total income 27,691 19,476 27,946 Interest cost 11,716 7,899 11,203 Administrative
Slide 21: Standalone Balance Sheet
Standalone Balance Sheet As on As on As on LIABILITIES (Rs. million) December – 12 December – 11 March – 12 Shareholder’s funds 43,582 28,891 29,510 Secured loans 134,753 101,093 117,660 Unsecured loans 47,222 34,205 21,951 Current liabilities & provisions 18,060 15,906 16,495 TOTAL 243,617 180,095
Slide 22: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 12 December – 11 March – 12 Loans disbursed 2,812 1,808 2,668 No. of Customer Contracts (Nos) 37,913 19,762 33,172 Outstanding loan book 7,562 4,642 5,352 Total income 970 595 8
Slide 23: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 12 December – 11 March – 12 Total income 606 259 465 Net premium 3,727 2,786 4,138 PBT 351 69 201 PAT 237 46 135 No. of Policies for the Period (nos.) 588,745 502,841 703,730 No. of
Slide 24: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 12 December – 11 March – 12 Income from operations 29,098 20,042 28,853 Other income 138 143 251 Total Income 29,236 20,185 29,104 Interest cost 12,066 8,008 11,399 Administrative
Slide 25: Consolidated Balance Sheet
Consolidated Balance Sheet As on As on As on LIABILITIES (Rs. million) December – 12 December – 11 March – 12 Shareholder’s funds 44,726 29,571 30,311 Minority Interest 92 75 77 Secured loans 146,475 105,691 124,650 Unsecured loans 46,995 34,012 21,814 Current liabilities & provisions 18,689 16,370
Slide 26: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Nine Months ended Nine Months ended Full year ended Segments December–12 December–11 March–12 Auto/ Utility vehicles 34% 31% 31% Tractors 19% 21% 20% Cars 25% 26% 27% Commercial vehicles and 10% 12% 12% Construction equipments Pre-owned vehicles and oth
Slide 27: Break up of AUM
Break up of AUM As on As on As on Segments December – 12 December – 11 March – 12 Auto/ Utility vehicles (M&M) 29% 30% 30% Tractors (M&M) 19% 20% 20% Cars and Non M&M UVs, Tractors & 32% 31% 31% SCVs Commercial vehicles and 13% 12% 12% Construction equipments Pre-owned vehicles and others 7% 7% 7% 2
Slide 28: 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% 2,33,983 CAGR(FY10-FY12): 40.3% Borrowings CAGR (FY10-FY12): 47.0% 1,74,985 181975 139611 1,24,024 87,053 96750 64577 FY10 FY11 FY12
Slide 29: Established track record
Established track record Figures on standalone basis ROA (Avg. Assets) (%) RONW (Avg. Net Worth) (%) 4.1% 4.1% 3.9% 21.5% 22.0% 22.8% 3.3% 3.5% 19.2% 20.0% FY10 FY11 FY12 9M FY12 9M FY13 FY10 FY11 FY12 9M FY12 9M FY13 Gross NPA and Net NPA to Total Assets (%) Leverage ratio 6.4% 3.7 3.9 4.7 4.7 4.2
Slide 30: Summary of Results
Summary of Results Figures on standalone basis Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 12 December – 11 March – 12 Total Income 27,691 19,476 27,946 Profit before tax 8,162 5,831 9,253 Profit after tax 5,489 3,924 6,201 Dividend (%) -- -- 140 Net Worth 43,
Slide 31: Ratio Analysis
Ratio Analysis Figures on standalone basis Nine Months ended Nine Months ended Year ended December – 12 December – 11 March – 12 PBT/Total Income 29.5% 29.9% 33.1% PBT/Total Assets 4.5% 4.4% 5.1% RONW (Avg. Net Worth) 20.0% 19.2% 22.8% Overheads/Total Assets 2.9% 3.2% 3.2% Debt / Equity 4.18:1 4.69:
Slide 32: Spread Analysis
Spread Analysis Figures on standalone basis Nine Months ended Nine Months ended Year ended December – 12 December – 11 March – 12 Total Income / Average Assets 17.5% 16.9% 17.7% Interest / Average Assets 7.3% 6.7% 7.0% Gross Spread 10.2% 10.2% 10.7% Overheads / Average Assets 3.4% 3.8% 3.8% Write of
Slide 33: NPA
NPA Figures on standalone basis Particulars (Rs. million) December – 12 December – 11 March – 12 Gross Non - Performing Assets 9,893 7,382 5,543 Less: NPA Provisions 6,160* 5,494 4,324 Net Non – Performing Assets 3,742 1,888 1,219 Total Assets (Incl. NPA Provision) 245,049 181,368 186,633 Gross NPA
Slide 34: 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 34
Slide 35: Technology initiatives and Employee management
Technology initiatives and Employee management 35
Slide 36: Technology initiatives
Technology initiatives Approximately 96% of our 639 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 quer
Slide 37: 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 for cri
Slide 38: 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 natural di
Slide 39: 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 Sector L
Slide 40: 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 2012 -
Slide 41: 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 42: Thank you
Thank you 42
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