Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q2 FY2023 Earnings Presentation
54 slides from Mahindra & Mahindra Financial Services's earnings presentation, Nov 2, 2022
Slide 1: Exchange filing cover letter for earnings presentation
mahindra FINANCE Mahindra & Mahindra Financial Services Ltd. Mahindra Towers, 4th Floor, Dr. G. M. Bhosale Marg, Worli, Mumbai - 400 018, India. nd 22nd November 2022 Tel.: +91 22 66526000 Fax: +91 22 24984170 To, +91 22 24984171 BSE Limited, (Security Code: 532720) Phiroze Jeejeebhoy Towers, Dalal
Slide 2: Quarter Result Update September 2022
Mahindra & Mahindra Financial Services Limited Quarter Result Update September - 2022 Corporate Office: Regd. Office: 4th Floor, Mahindra Towers, 4th Gateway Building, Apollo Bunder, Dr. G. M. Bhosale Marg, Worli, Mumbai-400 001, India Mumbai-400 018, India Tel: +91 22 2289 5500 Tel: +91 22 6652 600
Slide 3: Executive Summary
Executive Summary Financial Information .01 • Key Subsidiaries Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 4: Executive summary (1/2)
Executive summary (1/2) mahindra FINANCE Key Highlights ▪■ Disbursement of ₹ 11,824 crore for the the quarter, quarter, growth of 83% YoY ▪■ Strong Asset Growth with Loan Assets* at ₹ 73,817 crore; YoY growth of 16.0%; Sequential growth of 9.0% ▪■ Significant sequential reduction in GS 3 (GS 3 at 6.
Slide 5: Executive summary (2/2)
Executive summary (2/2) mahindra FINANCE Asset Quality ▪■ Provision coverage maintained @ 58.2% in Sep-22 ▪■ Continued with a healthy Collection Efficiency at 97% during Q2FY23 IRACP migration ▪■ Focused efforts to contain NPAs based on IRACP norms underway; Improvement in trajectory clearly visible
Slide 6: Business Strength
Business Strength mahindra FINANCE Capital Adequacy Gross Stage-3 Stage 3 - Coverage Ratio 27.8% 12.7% 58.1% 58.1% 58.2% 26.1% 25.9% 23.8% 8.0% 53.0% 7.7% 6.7% Sep-21 Mar-22 Jun-22 Sep-22 Sep-21 Mar-22 Jun-22 Sep-22 Sep-21 Sep-21 Mar-22 Jun-22 Sep-22 Well capitalized Asset Quality under control Prud
Slide 7: On path to achieving Vision 2025: Progress (H1 FY23)
On path to achieving Vision 2025: Progress (Ell (H1 FY23) mahindra FINANCE Stable asset quality 2x AUM New business contribution: GS-3 < 6% 15% [ H1 FY23: GS-3: 6.7% I H1 FY23: AUM Growth: 14%* X000 H1 FY23: New Business: 5%+ ~7.5% Maintain NIMs -7.5% Operating leverage: Cost to ~2.5% RoA -2.5% ~2.5
Slide 8: Financial Information - Standalone
Executive Summary Financial Information - Standalone .01 • Key Subsidiaries Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 9: Disbursement and Collection Trends
Disbursement and Collection Trends mahindra FINANCE on standalone basis Historical Disbursements (INR crores) FY 2023 i Q1 9,472 Q2 11,824 Q3 - Q4 - I FY/ YTD 21,296 FY 2022 3,872 6,475 8,032 9,202 27,581 FY 2021 2,733 4,028 6,270 5,970 19,001 Collection EfficiencyA Efficiency^ I Jul I Aug I Sep I Q
Slide 10: Break down of Disbursements
Break down of Disbursements mahindra FINANCE on standalone basis Half Year ended Half Year ended Year ended Asset Class Sep —– 22 Sep —– 21 March —– 22 Auto/ Utility vehicles 34% 35% 34% Tractors 11% 19% 16% Cars 17% 21% 19% Commercial vehicles and Construction equipments 11% 5% 8% Pre-owned vehicle
Slide 11: Break down of Business Assets
Break down of Business Assets mahindra FINANCE r on standalone basis Half Year ended Half Year ended Year ended Asset Class Sep —– 22 Sep —– 21 March –— 22 Auto/ Utility vehicles 31% 31% 32% Tractors 14% 17% 16% Cars 20% 22% 22% Commercial vehicles and Construction equipments 11% 14% 12% Pre-owned v
Slide 12: Break down by Geography
Break down by Geography mahindra FINANCE on standalone basis Sep 2022 H1 F2023 H1 18% 10% 21% 10% 10%/ 2021 Sep 2021 H1 F2022 15% 10% 16% 11% , 20% 19% 19% 19% lop Business Assets 23% Disbursement * 26% 23% 20% 4 CENTRAL EAST 29% 94 30% NORTH SOUTH WEST CENTRAL EAST 30% • 30% NORTH SOUTH WEST NORTH:
Slide 13: Broad Based Liability Mix
Broad Based Liability Mix mahindra FINANCE on standalone basil= basis / All figures in INR crores Funding Mix by Investor Category Funding Mix by type of Instrument Sep’ 22 Sep' Jun’22 Jun'22 Mar’22 Mar'22 Sep’ 22 Sep' Jun’22 Jun'22 Mar’22 Mar'22 Investor Type Instrument Type Amount % Share % Share
Slide 14: ALM Position and Liability Maturity
ALM Position and Liability Maturity mahinclra FINANCE All figures in INR crores Cumulative Inflow Cumulative Outflow Cumulative Mismatch % 90,000 81,099 81,099- 375% 75,000 68,885 - 300% 63,329 60,000 47,123 - 225% 45,000 37,293 - 150% 30,000 021 24,021 20,266 12,956 15,988 15,000 9,047 11,844 - 75%
Slide 15: Key Financials
Key Financials mahindra FINANCE on standalone basis I Disbursement Total Income Profit after Tax Q2 FY 23 Rs. 111824 11,824 crores Rs. 2,609 crores Rs. 448 crores 83% 3% 56% Q2 FY 22 Rs. 6,475 crores Rs. 2,522 crores Rs. 1,023 crores H1 FY 23 21,296 crores Rs. 211296 5,108 crores Rs. 57108 Rs. 671 c
Slide 16: Growth Trajectory
Growth Trajectory mahinclra FINANCE on standalone basis (1) (Rs. crores) Loan Book (1) Revenues (Rs. crores) 10,245 10,517 69,564 9,719 64,993 59,947 60,445 57,196 4,709 5,108 FY20 FY21 FY22 H1 FY22 H1 FY23 FY20 FY21 FY22 H1 FY22 H1 FY23 Pre-Provisioning Operating Profit (Rs. crores) (2) (Rs. crores
Slide 17: Financial Performance
Financial Performance mahinclra FINANCE on standalone basis (1) (%) Cost to income ratio (1) (%) (2) (%) Return on Assets (ROA) (2) (%) 41.8% 37.3% 35.8% 34.1% 1.7% 28.2% 1.3% 1.3% 0.4% NA FY20 FY21 FY22 H1 FY22 H1 FY23 FY20 FY21 FY22 H1 FY22 H1 FY23 (2) (%) Return on Net Worth (RONW) (2) (%) Asset
Slide 18: Standalone Profit & Loss Account
Standalone Profit & Loss Account mahinclra FINANCE Particulars (Rs. in crores) Q2FY23 Q2FY23 I Q1FY23 I Q-o-Q Q-o-Q I Q2FY22 I Y-o-Y I FY22 Revenue from operations (A) 2,586 2,486 4% 2,508 3% 9,658 Less: Finance cost (B) 1,069 931 15% 1,015 5% 3,920 NII (C= A+:' Nil A+B) 1,517 1,555 (2%) 1,493 2% 5,
Slide 19: Standalone Profit & Loss Account
Standalone Profit & Loss Account mahinclra FINANCE Particulars (Rs. in crores) FY23 H1FY23 Hi I H1FY22 Y-o-Y FY22 Revenue from operations (A) 5,072 4,687 8% 9,658 Less: Finance cost (B) 2,001 2,033 (2%) 3,920 p NII (C= A+B) 3,071 2,654 ,654 16% 5,738 Other Income (D) 36 22 43% 61 Total 1-• Income (E
Slide 20: Standalone Balance Sheet
Standalone Balance Sheet mahinclra FINANCE Particulars (Rs. in crores) As on Sep 30, 2022 As on Sep 30, 2021 As on Mar 31, 2022 ASSETS Financial Asset a) Cash and cash equivalents 383 716 328 b) Bank balance other than (a) above 3,277 3,515 3,823 c) Derivative financial instruments 22 55 27 d) Trade
Slide 21: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) mahinclra FINANCE Particulars (Rs. in crores) As on Sep 30, 2022 As on Sep 30, 2021 As on Mar 31, 2022 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 226 187 182 b) Payables i) Trade payables 766 529 955 ii) Other payables 22 24 50
Slide 22: Summary & Key Ratios
Summary & Key Ratios mahindra FINANCE basis ll on standalone basi Half year ended Half year ended Year ended Particulars – 22 Sep — – 21 Sep — March —– 22 I I I RONW (Avg. Net Worth) - annualised 8.9% NA 6.5% Debt I/ Equity 4.28:1 3.95:1 3.57:1 Capital Adequacy 23.8% 26.1% 27.8% Tier I 20.5% 22.3% 2
Slide 23: Spread Analysis
Spread Analysis mahindra FINANCE on standalone basis Half year ended Half year ended Year ended Particulars – 22 Sep — – 21 Sep — 21 March —– 22 Total Loan Income / Average Business Assets 13.4% 13.5% 13.8% Total Income / Average Assets 12.7% 12.5% 12.8% Interest cost / Average Assets 5.0% 5.4% 5.2%
Slide 24: Stage - Analysis
Stage 3 - Analysis mahindra FINANCE on standalone basis Particulars (Rs. in crores) except figures in % I Sep 30, 2022 I Jun 30, 2022 I Sep 30, 2021 I Mar 31, 2022 I Mar 31, 2021 Business Assets (including Provisions) 73,817 67,693 63,618 64,961 64,608 Gross Stage 3 4,942 5,436 8,069 4,976 5,786 Les
Slide 25: Credit Charge
Credit Charge mahindra FINANCE on standalone on standalone basis basis Q2FY23 Q1FY23 Q1FY23 Q2FY22 Q2FY22 H1FY23 H1FY23 H1FY22 H1FY22 FY22 FY22 FY21 FY21 Stage-1 Provisions Stage-1 Provisions 59 59 68 68 27 27 127 127 (7) (7) 22 22 (127) (127) Provisions Stage-2 Provisions (123) (123) (260) (260) 21
Slide 26: Stage Wise Provisioning
Stage Wise Provisioning mahindra FINANCE on n standalone basis Stage-Wise Assets and Provisioning 30th Sep 2022 As on 30th As on 30 th Jun 2022 30th As on 31 st Mar 2022 31st Rs. in crores Business Assets Provisions & Business Assets Provisions & Business Assets Provisions & (Amount and %) Coverage
Slide 27: Financial Information - Consolidated
Executive Summary Financial Information - Consolidated Key Subsidiaries Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 28: Key Financials
Key Financials mahindra FINANCE on consolidated basis Disbursement Total Income Profit after Tax Q2 FY 23 Rs. 12,249 crores Rs. 3,029 crores Rs. 492 crores 79% 3% 55% Q2 FY 22 Rs. 6,839 crores Rs. 2,951 crores Rs. 1,103 crores H1 FY 23 Rs. 22,117 crores Rs. 5,943 crores Rs. 732 crores 105% 1057 8% N
Slide 29: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account mahinclra FINANCE Particulars (Rs. in crores) Q2FY23 I Q1FY23 QI FY23 I Q-o-Q Q-°41 I Q2FY22 I Y-o-Y I FY22 Revenue from operations (A) 3,011 2,902 4% 2,929 3% 3% 11,318 Less: Finance cost (B) 1,192 1,052 13% 1,143 4% 4,418 NII (C= A+B) 1,819 1,850 (2%) 1,786 2% 6,
Slide 30: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account mahinclra FINANCE Particulars (Rs. in crores) I H1FY23 I H1FY22 Y-o-Y FY22 Revenue from operations (A) 5,913 5,478 8% 9,658 Less: Finance cost (B) 2,244 2,293 (2%) 3,920 p NII (C= A+B) 3,669 3,185 15% 5,738 Other Income (D) 30 39 (23%) 61 Total IncomeT(E=C+D) 1- •
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet mahinclra FINANCE Particulars (Rs. in crores) As on Sep 30, 2022 As on Sep 30, 2021 As on Mar 31, 2022 ASSETS Financial Asset a) Cash and cash equivalents 556 944 765 b) Bank balance other than (a) above 3,485 3,770 4,062 c) Derivative financial instruments 22 55 27 d) Tra
Slide 32: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) mahinclra FINANCE Particulars (Rs. in crores) As on Sep 30, 2022 As on Sep 30, 2021 As on Mar 31, 2022 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 226 187 182 b) Payables i) Trade payables 894 693 1,113 ii) Other payables 22 24
Slide 33: Key Subsidiaries
Executive Summary Financial Information .01 • Key Subsidiaries Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 34: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited mahindra FINANCE Particulars (Rs. in crores) Loans disbursed I Q2FY23 425 I Q2FY22 364 I H1FY23 821 I H1FY22 EHFY22 463 I i Year ended March —– 22 1,602 r No. of Customer Contracts (nos.) 12,719 18,546 28,881 21,606 75,327 Loans & Advances (net) 6,927 6,931 6,9
Slide 35: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited mahinclra FINANCE Particulars (Rs. in crores) No. of Policies for the Period (nos.) I Q2FY23 6,35,351 I Q2FY22 4,30,233 I H1FY23 11,51,327 I H1FY22 7,46,095 I Year ended – 22 March — 18,63,160 Net Premium 743 479 1,370 928 2360 i Total income 94 77 183 137 i 348 PB
Slide 36: Company Overview
Executive Summary Financial Information .01 • Key Subsidiaries Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 37: Company Background
Company Background mahindra FINANCE Parentage: (“MMFSL”) is a subsidiary of Mahindra and Mahindra & Mahindra Financial Services Limited ("MMFSL") Mahindra Limited (Mcap: Rs 1.68 trillion)* About MMFSL: India’s leading non-banking finance companies focused in MMFSL (Mcap: Rs 239 billion)*, one of Ind
Slide 38: MMFSL Group structure
MMFSL Group structure mahindra FINANCE (1) 80%") Mahindra 80% Mahindra Insurance Mahindra Insurance Brokers Brokers Limited Limited ("MIBL") (“MIBL”) Rise. Mahindra & Mahindra Limited (2) 98.43%P) 98.43% Mahindra Rural Housing Finance Limited (“MRHFL”) ("MRHFL") 52.16% 49% Mahindra Finance USA LLC (
Slide 39: Our Journey
Our Journey mahinclra FINANCE Commenced Housing Finance Maiden Retail NCD Issue of Rs. business through MRHFL QIP Issue of Rs. 426 crores 1000 crores Oversubscribed over 7x of base Raised Rs. 414 crores through JV with Rabobank subsidiary for tractor issue size of Rs. 250 crores Rights Issue of Rs.
Slide 40: Shareholding Pattern (as on September 30, 2022)
Shareholding Pattern (as on September 30, 2022) mahinclra FINANCE Shareholding Pattern Top 10 Public Shareholders ▪• Life Insurance Corporation Of India 12.09% ▪• Wishbone Fund, Ltd. ▪• HDFC Life Insurance Company Limited 18.63% ▪• HDFC Trustee Company Ltd 52.16% ▪• Ashish Dhawan 16.93% ▪• Nippon Li
Slide 41: Business Strategy
Executive Summary Financial Information .01 • Key Subsidiaries Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 42: Business Strategy
Business Strategy mahindra FINANCE Grow in rural and semi urban markets by providing financing, investment and insurance solutions Expand Branch Network Leverage existing customers base through Direct Marketing Initiatives Diversify Product Portfolio: Nurture new businesses of Digital Finance and Le
Slide 43: Transformation priorities
Transformation priorities mahindra FINANCE 1 1 Stabilize Asset Quality Focus on bringing the volatility down 2 2 Recharge Growth Build high quality diversified business J 3 Strengthen Tech & Digital Digital Data informed thinking 2 0 4 Future Ready Human Capital Capital High Performing Organisation
Slide 44: Sustainable profitable growth: Vision 2025
Sustainable profitable growth: Vision 2025 mahindra FINANCE Stable asset quality 2x AUM New business contribution: GS-3 < 6% 15% X000 ~7.5% Maintain NIMs -7.5% Operating leverage: Cost to ~2.5% RoA -2.5% ~2.5% Assets -2.5% 0 0 43
Slide 45: Extensive Branch Network
Extensive Branch Network mahinclra FINANCE ◼ • Extensive branch network with presence in 27 states and 7 union territories in India through 1,386 offices ◼ • Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of Central East North 2 1388 1384 1386 1322 0
Slide 46: Diversified Product Portfolio
Diversified Product Portfolio mahindra FINANCE I ▪• Loans for auto and utility vehicles, tractors, cars, commercial vehicles and construction Vehicle Financing equipments Qt t414a_ _ Pre-Owned Vehicles ▪• Loans for pre-owned cars, multi-utility vehicles, tractors and commercial vehicles lk SME Finan
Slide 47: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives mahindra FINANCE Employee engagement & training Technology initiatives ▪■ Foster a Digital Learning ecosystem that drives a culture of ▪■ Next gen API commissioned for scaling partnerships, integrating anytime-anywhere learning. fintech ecosystem & crea
Slide 48: Credit Rating
Credit Rating mahinclra FINANCE MMFSL believes that its credit rating and strong brand equity enables it to borrow funds at competitive rates j Credit Rating ••••• -m. India n la Ratings rtatings IND AAA Outlook U 00 i Short term debt MLD); Bank Facilities ► Long term and Subordinated debt (incl. MI
Slide 49: Awards & CSR Initiatives
Executive Summary Financial Information .01 • Key Subsidiaries C Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 50: Awards & Accolades, CSR Initiatives
mahindm FINANCE Awards & Accolades CSR Initiatives ■ Ranked 54 th among India Best Companies to Work 2021 54th 2021 by Great Place ■ To further solidify our adherence towards the well-being of the driver to Work ® Institute communities, your Company successfully completed the Phase I of its flagship
Slide 51: Risk Management Policies
Executive Summary Financial Information .01 • Key Subsidiaries Company Overview Business Strategy Transforming rural rural lives across the country Awards & CSR Initiatives Risk Management Policies mahinclra FINANCE
Slide 52: Risk Management Policies
Risk Management Policies mahinclra FINANCE Provisioning Norms Stage Description Provision Mechanism Stage 1 0- 30 days past due PD * LGD * Stage 1 Asset Stage 2 > 30 to <= 90days past due PD * LGD * Stage 2 Asset Stage 3 > 90 days past due LGD * EAD of Stage 3 Asset* The Company may also make additi
Slide 53: Disclaimer
Disclaimer mahindra FINANCE 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 “Company”), nor shall it or any part of it or the fact of its distribution form the
Slide 54: Thank You
10 11 040 0 0 tkk g S7 Thank You Transforming rural rural lives across the country country mahindra FINANCE
Mahindra & Mahindra Financial Services — Q2 FY2023 Earnings Presentation on 6ix