Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q4 FY2013 Earnings Presentation
42 slides from Mahindra & Mahindra Financial Services's earnings presentation, March 2013
Slide 1: Mahindra & Mahindra Financial Services Limited Analyst Meet
Mahindra & Mahindra Financial Services Limited Analyst Meet MARCH - 2013 1
Slide 2: Company overview
Company overview Transforming rural lives across the country 2
Slide 3: Background
Background • Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 547 billion)*, one of India’s leading tractor and utility vehicle manufacturers • MMFSL (Mcap: Rs 121 billion)* is one of India’s leading non-banking finance companies foc
Slide 4: MMFSL Group structure
MMFSL Group structure Mahindra & Mahindra Limited 51.20% Mahindra & Mahindra Financial Services Limited (1) 85% 87.5%(2) 49% 100% USA Mahindra Insurance Mahindra Rural Housing Mahindra Finance USA Mahindra Business & Brokers Limited Finance Limited LLC Consulting Services (“MIBL”) (“MRHFL”) (Joint v
Slide 5: Our Journey Thus Far
Our Journey Thus Far Stake sale in MIBL to Inclusion resources pvt. Ltd. QIP Issue of Rs. 8.67 Bn FY 13 Maiden QIP Issue of Rs.4.26 Bn JV with Rabobank subsidiary for tractor financing in USA FY 11 Received 12.5% equity participation Commenced housing finance business FY 09 from NHB for MRHFL throug
Slide 6: Shareholding pattern
Shareholding pattern (as on March 31, 2013) Key Shareholders Non Morgan Stanley Asia (Singapore) Pte Institutio ESOP Mutual ns Trust Funds & 5.0% Cartica Capital Ltd 1.0% DII 4.8% Eastspring Investments India Equity Open Ltd Mahindra Fidelity Investment Trust & Mahindra Wasatch Emerging Ma
Slide 7: Industry overview
Industry overview Transforming rural lives across the country 7
Slide 8: Automobile Finance Market to Grow by 19-21% over the next 5 years
Automobile Finance Market to Grow by 19-21% over the next 5 years Growth in New Vehicle Finance Disbursements CAGR FY12- (Rs. billion) FY10E FY11E FY12P FY13P FY17P FY17P Cars 349 476 456 506 1165 19-21% Utility Vehicles 108 155 172 217 409 18-20% Commercial Vehicles 272 402 478 457 1150 18-20% Two-
Slide 9: Domestic Car and UV Industry to grow at a CAGR of 12-14%
Domestic Car and UV Industry to grow at a CAGR of 12-14% over the next 5 years FY12 FY13E FY14P FY13-18P Strong prospects in the long-term. CAGR (%) CAGR (%) CAGR (%) CAGR (%) Growth to be driven by increase in income of households and higher Small Cars (1.5) (9)-(7) 8-10 11-13 passenger vehicle p
Slide 10: Auto Industry Volume
Auto Industry Volume FY13 FY12 (Volume in „000) CAGR (%) (Nos.) (Nos.) Passenger Vehicles (PVs) Passenger Cars / Vans 1715 1798 (5%) UVs 500 324 54% Commercial Vehicles (CVs) M&HCVs 239 309 (23%) LCVs 470 410 15% Three Wheelers 495 471 5% Source: Auto Monitor 10
Slide 11: Overall Demand Drivers
Overall Demand Drivers Increase in affordability Growth in Addressable Market Entry of New Players and New Model Launches Increase in dealerships and access to Finance Reduction in holding period, which increases the demand for second vehicles Growth in Economic Activity Infrastructure
Slide 12: Business Strategy
Business Strategy Transforming rural lives across the country 12
Slide 13: Business Strategy
Business Strategy Grow in rural and semi urban markets for vehicle and automobile financing Expand Branch Network Leverage existing customers base through Direct Marketing Initiatives Diversify Product Portfolio Broad base Liability Mix Continuing to attract, train and retain talented employees Effe
Slide 14: Extensive branch network
Extensive branch network MMFSL has an extensive branch network with presence in 25 states and 4 union territories in India through 657 offices as of March 31, 2013 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 5 HP 12 20 657 PB UC 8 607 22
Slide 15: 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 fina
Slide 16: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Year ended Year ended Year ended Segments March–13 March–12 March–11 Auto/ Utility vehicles 31% 26% 30% Tractors 19% 20% 22% Cars 24% 26% 28% Commercial vehicles and 14% 17% 11% Construction equipments Pre-owned vehicles and others 12% 11% 9% 16
Slide 17: Break up of AUM
Break up of AUM As on As on As on Segments March – 13 March – 12 March – 11 Auto/ Utility vehicles (M&M) 29% 30% 31% Tractors (M&M) 19% 20% 23% Cars and Non M&M UVs, Tractors & 32% 31% 31% SCVs Commercial vehicles and 13% 12% 9% Construction equipments Pre-owned vehicles and others 7% 7% 6% 17
Slide 18: Broad based Liability Mix
Broad based Liability Mix MMFSL believes that its credit rating and strong brand equity enable it to borrow funds at competitive rates Total consortium size of Rs.10 Bn comprising several banks Credit Rating CRISIL Outlook Fixed Deposit programme FAAA Stable Short term debt A1+ Stable Long term
Slide 19: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Training programs for employees on regular Approximately 98% of our 657 offices are basis connected to the centralised data centre in Mumbai 5 days induction program on product knowledge, busin
Slide 20: Financial Information
Financial Information Transforming rural lives across the country 20
Slide 21: Key Financials
Key Financials Q4- FY13 Vs Q4- FY12 (Figures on standalone basis) Growth in Value of Asset Growth in Total income Growth in PAT Financed Rs 11,256 mn Rs 3,338 mn Rs 66,449 mn 33% 47% 25% Rs 8,470 mn Rs 2,277 mn Rs 53,323 mn FY13 Vs FY12 (Figures on standalone basis) Growth in Value of Asset Growth i
Slide 22: Strong Growth Trajectory
Strong Growth Trajectory Figures on standalone basis Increasing Loan Book (Rs. Bn) Growing Revenues (Rs. Bn) 38.95 240.38 40% 39% 27.95 174.98 19.78 124.02 FY11 FY12 FY13 FY11 FY12 FY13 Improving Profitability (1) (Rs. Bn) Increasing Book Value Per Share (2) (Rs.) 8.83 38% 78.3 6.20 28% 4.63 56.7 47
Slide 23: Consistent Financial Performance
Consistent Financial Performance Figures on standalone basis Declining cost to income ratio (1) (%) Steady ROA (2) (%) 36.3% 35.4% 4.1% 4.0% 3.9% 32.6% FY11 FY12 FY13 FY11 FY12 FY13 Increasing RONW (3) (%) Robust Asset Quality 23.5% 4.0% 3.0% 3.0% 22.8% 1.0% 0.6% 0.7% 22.0% FY11 FY12 FY13 Gross NPA
Slide 24: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Particulars (Rs. in Million) FY13 FY12 FY11 Revenue from operations 38,567 27,681 19,653 Other income 380 265 122 Total Revenue 38,947 27,946 19,775 Expenses: Employee benefits expense 2,234 1,998 1,515 Finance costs 16,188 11,203 6,602 Depreciation and amortizatio
Slide 25: Details of Exceptional Items
Details of Exceptional Items Particulars (Rs. in Million) FY13 Profit on sale of shares of MIBL 643 Additional general provision on standard assets (357) Exceptional items impact on profit before tax 286 Tax impact of above 132 Exceptional item net of tax impact 154 25
Slide 26: Standalone Balance Sheet
Standalone Balance Sheet As on Mar 31 As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2011 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,126 1,027 1,025 b) Reserves and Surplus 43,420 28,483 23,876 Shareholders' funds 44,546 29,510 24,901 Non-current liabilities a) L
Slide 27: Standalone Balance Sheet (Cont'd)
Standalone Balance Sheet (Cont’d) As on Mar 31 As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2011 ASSETS Non-current assets a) Fixed Assets 1,068 989 790 b) Non-current investments 3,451 2,131 1,430 c) Deferred tax assets (Net) 2,382 2,012 2,167 d) Long-term loans and advances 129
Slide 28: Key Subsidiaries
Key Subsidiaries Transforming rural lives across the country 28
Slide 29: Mahindra Rural Housing Finance
Mahindra Rural Housing Finance Year ended Year ended Year ended Particulars (Rs. million) March – 13 March – 12 March – 11 Loans disbursed 4,329 2,668 2,029 No. of Customer Contracts (Nos) 61,332 33,172 21,981 Outstanding loan book 8,795 5,352 3,152 Total income 1,404 857 486 PBT 274 161 122 PAT 203
Slide 30: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Year ended Year ended Year ended Particulars (Rs. million) March – 13 March – 12 March – 11 Total income 863 465 517 Net premium 5,538 4,138 2,891 PBT 512 201 329 PAT 344 135 218 No. of Policies for the Period (nos.) 802,829 703,730 508,877 No. of employees (nos.)
Slide 31: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Particulars (Rs. in Million) FY13 FY12 Revenue from operations 40,950 28,894 Other income 180 209 Total Revenue 41,130 29,103 Expenses: Employee benefits expense 3,793 3,127 Finance costs 16,706 11,399 Depreciation and amortization expense 237 203 Provisions and
Slide 32: Consolidated Balance Sheet
Consolidated Balance Sheet As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,126 1,027 b) Reserves and Surplus 44,670 29,284 Shareholders' funds 45,796 30,311 Minority Interest 237 77 Non-current liabilities a) Long-term bo
Slide 33: Consolidated Balance Sheet (Cont'd)
Consolidated Balance Sheet (Cont’d) As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 ASSETS Non-current assets a) Fixed Assets 1,137 1,028 b) Non-current investments 2,417 1,472 c) Deferred tax assets (Net) 2,421 2,033 d) Long-term loans and advances 141,662 96,384 e) Other non curre
Slide 34: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Year ended Year ended Year ended Particulars March – 13 March – 12 March – 11 RONW (Avg. Net Worth) 23.5% 22.8% 22.0% Debt / Equity 4.24:1 4.74:1 3.88:1 Capital Adequacy 19.7% 18.0% 20.3% Tier I 17.0% 15.1% 17.0% Tier II 2.7% 2.9% 3.3% EPS (Basic) (Rs
Slide 35: Spread Analysis
Spread Analysis Figures on standalone basis Year ended Year ended Year ended March – 13 March – 12 March – 11 Total Income / Average Assets 18.0% 17.7% 17.7% Interest / Average Assets 7.4% 7.0% 5.8% Gross Spread 10.6% 10.7% 11.9% Overheads / Average Assets 3.5% 3.8% 4.4% Write offs & NPA provisions
Slide 36: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) March – 13 March – 12 March – 11 Gross Non - Performing Assets 7,630 5,543 5,488 Less: NPA Provisions 5,030 4,324 4,744 Net Non – Performing Assets 2,600 1,219 744 Total Assets (Incl. NPA Provision) 256,067 186,634 137,895 Gross NPA
Slide 37: Key Risk Management Practices & Regulatory changes
Key Risk Management Practices & Regulatory changes Transforming rural lives across the country 37
Slide 38: Conservative Risk Management Policies
Conservative Risk Management Policies Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL 6 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% Key Risks & Management Strategies Key Risks Management Strategies
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 Sect
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
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 Transforming rural lives across the country 42
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