Arman Financial Services Limited · NSE:ARMANFIN
Arman Financial Services — Q1 FY21 Earnings Presentation
36 slides from Arman Financial Services's earnings presentation, Sep 1, 2020
Slide 1: Cover letter to stock exchanges
Date: September 1, 2020 To, To, BSE Limited National Stock Exchange of India Limited P. J. Tower, “Exchange Plaza” C-1, Block G, Dalal Street, Bandra Kurla Complex, Mumbai–400001 Bandra, Mumbai- 400051 Script Code: 531179 Symbol: ARMANFIN ISIN: INE109C01017 Series: EQ Dear Sir, SUB: PRESENTATION ON
Slide 2: Arman Financial Services Ltd. Q1 FY21 Investor Presentation
INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Q1 FY21 - Investor Presentation September 2020
Slide 3: 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 4: Contents
CONTENTS 04 Performance Update – Q1 FY21 13 Liability Overview 16 Company Overview 24 Product Overview 28 Annexures
Slide 5: Financial Performance Update – Q1 FY21
Financial Performance Update – Q1 FY21
Slide 6: Q1 FY21 – Financial Performance Highlights
Q1 FY21 – Financial Performance Highlights ✓ Total AUM increased by 14% YoY to INR 8,231 Mn (Q1 FY20 AUM: INR 7,241 Mn) Shareholders Equity Stood at INR 1,775 Mn in Q1 FY21 (BVPS is INR 210) ✓ Consolidated Debt-Equity Ratio stood at 4.0x on 30 June’20 (exclude direct assignment) ✓ Q1 FY21 Net Total
Slide 7: Impact of Covid-19 Pandemic on the Operations
Impact of Covid-19 Pandemic on the Operations Impact on Loan Losses & Provisions, and Profitability All Figures in INR Mn Q1 FY21 FY20 Contingent Contingent Reported COVID Adjusted Adjusted Reported COVID Adjusted Adjusted Business Segment Provisioning Provisioning PAT Adjusted PAT ROAA % ROAE* PAT
Slide 8: Update on Collections
Update on Collections Update on Collections ❑ Collections have improved across all 3 segments since June 2020, reducing the loan book under moratorium (details given in the table below) • Healthy pick-up witnessed in 2W and MSME collections in July and August 2020; with both segments witnessing over
Slide 9: Q1 FY21 – Consolidated Profit & Loss Statement
Q1 FY21 – Consolidated Profit & Loss Statement Particulars (INR Mn) Q1 FY21 Q1 FY20 YoY (%) FY20 FY19 YoY (%) Assets Under Management (AUM) 8,231 7,241 14% 8,599 6,848 26% Disbursements - 1,901 - 8,736 7,836 12% Shareholder’s Equity * 1,775 1,356 31% 1,722 1,232 40% Income from Operations 490.6 477.
Slide 10: Q1 FY21 – Microfinance “Namra” Performance Update
Q1 FY21 – Microfinance “Namra” Performance Update Particulars (INR Mn) Q1 FY21 Q1 FY20 YoY (%) FY20 FY19 YoY (%) Asset Under Management 6,051 5,137 18% 6,215 4,838 28% ❖ Microfinance AUM grew by 18% YoY to INR 6,051 Mn Disbursements - 1,395 - 6,531 5,896 11% • Active MFI Customer base stood at ~3.7
Slide 11: Q1 FY21 - Microfinance Performance Update
Q1 FY21 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 6,215 6,051 395 390 5,826 1,802 375 5,553 1,729 5,137 1,605 324 333 1,395 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 * Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21
Slide 12: Q1 FY21 – Microfinance Performance Update
Q1 FY21 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 25.6% 26.0% 26.0% 25.6% 52.9% 21.6% 43.3% 43.9% 40.7% 36.9% 14.8% 15.0% 16.0% 13.3% 10.5% Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Yields % NIM % Cost / Income (%) Asset Quality
Slide 13: Q1 FY21 – Standalone Performance Update (2W & MSME)
Q1 FY21 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q1 FY21 Q1 FY20 YoY (%) FY20 FY19 YoY (%) ❖ Standalone AUM stood at INR 2,180 Mn – higher by 4% YoY Asset Under Management 2,180 2,104 4% 2,384 2,010 19% • MSME AUM grew by 22% YoY to INR 1,357 Mn Disbursements - 506 - 2,205 1,
Slide 14: Q1 FY21 - MSME Performance Update
Q1 FY21 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 368 363 117 1,433 108 107 1,330 1,357 333 105 1,257 299 1,116 91 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 * Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Asset Qualit
Slide 15: Q4 FY20 - 2W Performance Update
Q4 FY20 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 274 64 66 1,018 63 988 960 951 57 53 823 207 205 157 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 * Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 Q1 FY21 Asset Quality Yields % 4.1%
Slide 16: Liability Overview
nee ‘Liability Overview
Slide 17: Efficient Liability Management
Efficient Liability Management Funding profile is well diversified with increase in share of funds from NCDs Q4 FY20 - Borrowing Mix % Q1 FY21 - Borrowing Mix % INR 7,655 Mn * INR 7,560 Mn # Banks & SFBs 2% 1% 15% 15% NABARD & MUDRA 36% 6% 34% NBFC / FI 6% 6% 5% Securitization ECB 29% 6% 29% 10% NCD
Slide 18: Lending partners
Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners NCDs & ECB 22 17
Slide 19: Company Overview
Company Overview
Slide 20: Key Strengths
Key Strengths Genesis Robust Risk Management Framework ▪ Arman Financial Services (“Arman”) is a diversified NBFC ▪ Superior Asset Quality – GNPA: 1.1%; NNPA: 0.1% (Q1 FY21) focusing on large under-served rural & semi-urban retail markets ▪ Consistent rating upgrades backed by strong financial & ope
Slide 21: 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 22: Product Snapshot
Product Snapshot • 28 years of existence • Active customer base of 4.44 lakh • Employee strength of 1,752 employees • Completely in-house operations – Sourcing, Credit & Collections Microfinance MSME Loans 2-Wheeler Loans Rural 2W Loans % of Total AUM 74% 16% 9% 1% (in Pilot Stage) LTV Unsecured Cas
Slide 23: 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 24: Strong Growth in AUM & Disbursements
Strong Growth in AUM & Disbursements….. Total AUM (INR Mn) 10000 • Diversified portfolio of 8,231 Mn in Q1 FY21 split between – 50% 10000 9000 • Microfinance: INR 6,051 Mn (74%), 8,599 8000 76%# • MSME Loans: INR 1,357 Mn (16%) 8000 6,847 17% 7000 14% • 2-Wheeler Loans: INR 823 Mn (10%) 11% • 6000 6
Slide 25: 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 Demonetization CAGR: 49% CAGR: 47% 2,152 2.6% 2.6% * Demonetization 2.0% 28.7% 28.3% 27.4% 1,411 2
Slide 26: Shareholding Pattern
Shareholding Pattern SHAREHOLDING – 30th June 2020 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 is a
Slide 27: Product Overview
MSME EOANS )S Product Overview
Slide 28: Product Overview: Microfinance
Product Overview: Microfinance Product Overview FY20 – Key Metrics (Mn) ▪ JLG model with small ticket loans (Avg. Ticket Size – INR 6,215 6,531 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 29: Product Overview: 2W & Rural 2W Loans
Product Overview: 2W & Rural 2W Loans Product Overview FY20 – Key Metrics (Mn) ▪ Hypothecation (secured) loans given to self-employed / cash- 951 843 salaried customer in the informal segment in semi-urban / rural areas for a 2W AUM (INR Mn) Disbursement (INR Mn) ▪ Currently operates only in Gujarat
Slide 30: 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 & Maharashtra, with 35 branches • Feet-on-Stre
Slide 31: Group – CFO contact details
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 32: Annexures
Ess to INCLUSION 1 = Annexures
Slide 33: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Disbursement growth is driven by customer & branch addition AUM growth exceeds MFI industry growth rates 3.0 Demonetization 900.0 CAGR: 57% 2.5 2.24 2.32 800.0 700.0 6,215 2.0 1.70 600.0 Demonetization 1.33 500.0 4,837 1.5 3,170 400.0 0.80 0.74 653 1.0 590 300.0 400
Slide 34: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency MFI AUM Mix (%) Demonetization 1% 1% 61% 7% 18% 21% 20% 56% 17% 18% 48% 13% 21% 43% 21% 40% 39% 21% 92% 27% 82% 25% 72% 44% 31% 27% FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20
Slide 35: 2W Loans: 5-Year Performance
2W Loans: 5-Year Performance Yields (%) & NIM (%) Trend Arman 2W AUM/ has seen steady growth over FY15-20 1200.0 CAGR: 14% 1000.0 35.0% 32.1% 30.4% 800.0 30.0% 25.7% 24.9% 23.9% 25.5% 25.0% 600.0 20.0% 1,017 951 900 20.4% 19.6% 400.0 738 18.4% 15.0% 14.8% 15.6% 16.5% 555 493 10.0% 200.0 5.0% 0.0% 0.
Slide 36: MSME Loans: 3-Year Performance
MSME Loans: 3-Year Performance Disbursement Growth AUM Growth 3500 CAGR: 61% 33000 CAGR: 76% 1,433 30000 3000 27000 24,586 2500 992 24000 21000 2000 18000 16,284 15000 1500 12000 9,756 461 1000 9000 1,362 1,054 6000 978 500 61 3000 527 0 64 0 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 Arman MSME disbur
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