Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY2022 Earnings Presentation
52 slides from Mahindra & Mahindra Financial Services's earnings presentation, Jul 26, 2021
Slide 1: Stock exchange cover letter for investor presentation
Mahindra & Mahindra Financial Services Ltd. Mahindra Towers, 4th Floor, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 018 India Tel: +91 22 66526000 Fax: +91 22 24984170 +91 22 24984171 26th July, 2021 The General Manager-Department of The Manager-Listing Department, Corporate Services, National Stock E
Slide 2: Quarter Result Update June 2021
Mahindra & Mahindra Financial Services Limited Quarter Result Update June - 2021 Corporate Office: Regd. Office: Mahindra Towers, 4th Floor, 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 6000 Fax:+91
Slide 3: Transforming rural lives across the country
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 2
Slide 4: Executive summary
Executive summary • ECL provision* of Rs. 2,124 Crs in Q1 F22 … loan assets in Stage 3 (180K contracts), Stage 2 (316K contracts) Driven by covid-related liquidity issues for consumers and limited restructuring • Provision reversals expected for 80-90% of loan contracts over Q3/ Q4 F22 Contrac
Slide 5: GNPA and Provisions
GNPA and Provisions ‘000s NPA contract movement^ GNPA% 180 294 Stage 3 (# of contracts) 15.5% Q1 F22 139 20 5.5* 9.0% ECL provision: Rs. 2,124 Crs Mar-21 Resolved Forward flow Additions Jun-21 Mar-21 Jun-21 Stage 2 278 131 61 316 402 Key Drivers • Rural impact with significant impact during COVID wa
Slide 6: Deep dive – Stage 3 & 2 contracts go forward approach
Deep dive – Stage 3 & 2 contracts … go forward approach ‘000s Stage 3 (# of contracts)^ Stage 2 (# of contracts) ^ ‘000s Solvable: Solvable: 170K contracts 294 78 402 326 334K contracts … (250K+ rollback) 92 124 8 68 Jun-21 Part payment <50% contract Others Jun-21 Part payment <50% contract Others r
Slide 7: Historic trends for GNPA
Historic trends for GNPA Economic Crisis Demonetization GNPA: >180 days, I-GAAP GNPA: >90 days, IND AS 16% Stress period Recovery 16% Stress period Recovery 14.5% 12% 12% 10.1% 9.0% 9.0% 8% 8% 6.4% 5.9% 4.0% 4% 4% 0% 0% Q4-08 Q1-08 Q2-08 Q3-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2
Slide 8: Business strength
Business strength Overlay provisions (Rs. Crs) Capital Adequacy Stage 3 - Coverage Ratio 2,709 23.8% 53.7% 19.6% 40.1% 1,051 Q1 F21 Q1 F22 Q1 F21 Q1 F22 Q1 F21 FY21 Overlay provisions maintained Well capitalized Prudent 7
Slide 9: Business context of Q1 F22
Business context of Q1 F22 40%+ of 40% of the Covid Positive Dose 1: 70% branches working days Q1FY22: 7% Both doses: 7% closed at peak available Containment zone Working days Impact on workforce Employees Vaccinated Q1FY22: 80% Stage-3 3,872 crores, June 21: 90% Q1FY22: 64% Q1FY22: 15.5% 42% ↑ YoY
Slide 10: Financial Information - Standalone
Executive Summary Financial Information - Standalone Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 9
Slide 11: Break down of Disbursements
Break down of Disbursements on standalone basis Quarter ended Quarter ended Year ended Asset Class June – 21 June – 20 March – 21 Auto/ Utility vehicles 36% 23% 34% Tractors 25% 29% 18% Cars 20% 15% 21% Commercial vehicles and Construction equipments 4% 6% 5% Pre-owned vehicles 12% 3% 12% SME and Ot
Slide 12: Break down of Business Assets
Break down of Business Assets on standalone basis Quarter ended Quarter ended Year ended Asset Class June – 21 June – 20 March – 21 Auto/ Utility vehicles 29% 28% 30% Tractors 17% 17% 17% Cars 21% 21% 22% Commercial vehicles and Construction equipments 14% 19% 16% Pre-owned vehicles 12% 10% 9% SME a
Slide 13: Break down by Geography
Break down by Geography on standalone basis June 2021 Q1 FY 2022 June 2020 Q1 FY 2021 15% 11% 14% 10% 10% 11% 15% 31% 21% 24% 20% 20% 26% 27% 18% Disbursement* 13% 29% 23% 29% 31% CENTRAL EAST NORTH SOUTH WEST NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Ladakh, Punjab, Ra
Slide 14: Broad Based Liability Mix
Broad Based Liability Mix on standalone basis All figures in INR crores Funding Mix by Investor Category Funding Mix by type of Instrument Jun’21 Mar’21 Jun’21 Mar’21 Investor Type Instrument Type Amount % Share % Share Amount % Share % Share Banks/ Dev. Institutions 26,778 48.1% 50.5% NCDs 14,936 2
Slide 15: ALM Position and Liability Maturity
ALM Position and Liability Maturity All figures in INR crores Liability Maturity^ Jul-21 Aug-21 Sep-21 Q1 FY 22 Oct-21 Nov-21 Dec-21 Q2 FY 22 H1 FY 22 Bank Loans 185 190 883 1,258 14 229 1,232 1,475 2,733 Market Instuments (NCD/ CP) 575 95 - 670 250 95 256 601 1,271 Others (FD/ ICD) 330 375 294 998
Slide 16: Key Financials
Key Financials on standalone basis Total Income Profit after Tax Disbursement Q1 FY 22 Rs. 2,187 crores Rs. -1,529 crores Rs. 3,872 crores 18% NA 42% Q1 FY 21 Rs. 2,655 crores Rs. 156 crores Rs. 2,733 crores 15
Slide 17: Growth Trajectory
Growth Trajectory on standalone basis Loan Book (1) (Rs. crores) Revenues (Rs. crores) 64,993 10,245 10,517 61,250 63,840 59,947 8,810 56,409 2,655 2,187 FY19 FY20 FY21 Q1FY21 Q1FY22 FY19 FY20 FY21 Q1FY21 Q1FY22 Pre-Provisioning Operating Profit (Rs. crores) Profit after Tax (2) (Rs. crores) Overlay
Slide 18: Financial Performance
Financial Performance on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 2.6% 38.0% 37.3% 36.0% 28.2% 1.3% 24.9% 0.8% 0.4% NA FY19 FY20 FY21 Q1FY21 Q1FY22 FY19 FY20 FY21 Q1FY21 Q1FY22 Return on Net Worth (RONW) (2) (%) Asset Quality (%) Gross NPA Net NPA 15.2% 15.46% 8.4
Slide 19: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in crores) Q1FY22 Q1FY21 Y-o-Y FY21 Revenue from operations (A) 2,176 2,641 -17.6% 10,395 Less: Finance cost (B) 1,018 1,265 -19.5% 4,733 NII (C= A+B) 1,158 1,376 -15.8% 5,662 Other Income (D) 11 14 -23.3% 122 Total Income (E=C+D) 1,169 1,390 -15.9%
Slide 20: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in crores) As on Jun 30, 2021 As on Jun 30, 2020 As on Mar 31, 2021 ASSETS Financial Asset a) Cash and cash equivalents 402 1,501 571 b) Bank balance other than (a) above 2,771 755 2,699 c) Derivative financial instruments 48 59 26 d) Trade Receivables 4 10
Slide 21: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in crores) As on Jun 30, 2021 As on Jun 30, 2020 As on Mar 31, 2021 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 146 65 173 b) Payables i) Trade payables 481 402 596 ii) Other payables 25 18 47 c) Debt Securities
Slide 22: Summary & Key Ratios
Summary & Key Ratios on standalone basis Quarter ended Quarter ended Year ended Particulars June – 21 June – 20 March – 21 RONW (Avg. Net Worth) ^ NA 5.3% 2.5% Debt / Equity 4.21:1 5.49:1 3.98:1 Capital Adequacy$ 23.8% 19.6% 26.0% Tier I 20.1% 15.3% 22.2% Tier II 3.7% 4.3% 3.8% EPS (Basic) (Rs.)* -1
Slide 23: Spread Analysis
Spread Analysis on standalone basis Quarter ended Quarter ended Year ended Particulars June – 21 June – 20 March – 21 Total Loan Income / Average Business Assets 12.6% 14.8% 15.0% Total Income / Average Assets 11.8% 14.0% 13.9% Interest cost / Average Assets 5.5% 6.7% 6.2% Gross Spread 6.3% 7.3% 7.7
Slide 24: Collection Efficiency and Restructuring
Collection Efficiency and Restructuring on standalone basis Collection Efficiency^ April May June Quarter 4 FY 2021 72% 67% 90% 80% FY 2020 27% 50% 85% 67% ^ Computed as (Current month demand collected + Overdues collected)/(Current month demand due for the month) Without considering restructured co
Slide 25: NPA Analysis
NPA Analysis on standalone basis Particulars (Rs. in crores) except figures in % As on Jun 30, 2021 As on Jun 30, 2020 As on Mar 31, 2021 Business Assets (including Provisions) 63,582 67,672 64,608 Gross NPA (Stage 3) 9,832 6,218 5,786 Less: ECL Provisions (Stage 3) 5,281 2,492 3,352 Net NPA (Stage
Slide 26: Movement of Provisions and Management Overlay
Movement of Provisions and Management Overlay on standalone basis Q1FY22 Year ended March – 21 Rs. in crores ECL Provisions Overlay Total ECL Provisions Overlay Total Stage-1 Provisions (33) - (33) (69) (58) (127) Stage-2 Provisions 621^ - 621 161 (42) 119 Stage-3 Provisions 1,536 393 1,929 (270) 1,
Slide 27: Stage Wise Provisioning
Stage Wise Provisioning on standalone basis Stage-Wise Assets and Provisioning As on 30th Jun 2021 As on 31st Mar 2021 Rs. in crores Business Assets % Provisions Coverage Business Assets % Provisions Coverage Stage - 1 Assets 41,434 65.17% 389 0.9% 50,713 78.49% 423 0.8% Stage - 2 Assets 12,316 19.3
Slide 28: Financial Information - Consolidated
Executive Summary Financial Information - Consolidated Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 27
Slide 29: Key Financials (Consolidated)
Key Financials (Consolidated) on consolidated basis Total Income Profit after Tax Disbursement Q1 FY 22 Rs. 2,567 crores Rs. -1,573 crores Rs. 3,972 crores 16% NA 45% % Q1 FY 21 Rs. 3,069 crores Rs. 432 crores Rs. 2,733 crores 28
Slide 30: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Particulars (Rs. in crores) Q1FY22 Q1FY21 Q-o-Q FY21 Revenue from operations (A) 2,550 3,057 -16.6% 12,050 Less: Finance cost (B) 1,151 1,401 -17.8% 5,307 NII (C= A+B) 1,399 1,656 -15.5% 6,743 Other Income (D) 17 12 43.7% 120 Total Income (E=C+D) 1,416 1,668 -15.1%
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in crores) As on Jun 30, 2021 As on Jun 30, 2020 As on Mar 31, 2021 ASSETS Financial Asset a) Cash and cash equivalents 509 1,685 808 b) Bank balance other than (a) above 3,145 755 3,174 c) Derivative financial instruments 48 59 26 d) Trade Receivables 53
Slide 32: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in crores) As on Jun 30, 2021 As on Jun 30, 2020 As on Mar 31, 2021 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 146 65 173 b) Payables i) Trade payables 632 587 732 ii) Other payables 25 18 47 c) Debt Securitie
Slide 33: Key Subsidiaries
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 32
Slide 34: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Year ended Particulars (Rs. in crores) Q1FY22 Q1FY21 March – 21 Loans disbursed 100 - 797 No. of Customer Contracts (nos.) 3,060 - 34,559 Loans & Advances (net) 6,932 7,784 7,128 Total income 334 385 1,455 PBT -94 57 195 PAT -65 48 151 Net-worth 1,339 1,297 1,4
Slide 35: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Quarter ended Quarter ended Year ended Particulars (Rs. in crores) June – 21 June – 20 March – 21 No. of Policies for the Period (nos.) 3,12,937 2,01,188 1,439,023 Net Premium 448 289 1,794 Total income 60 41 269 PBT 5 3 44 PAT 3 2 32 No. of employees (nos.) 1,123
Slide 36: Company Overview
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 35
Slide 37: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 950 billion)* About MMFSL: MMFSL (Mcap: Rs 191 billion)*, one of India’s leading non-banking finance companies focused in the rural and semi-urban sector
Slide 38: MMFSL Group structure
MMFSL Group structure (1) 80% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 98.42%(2) Mahindra Rural Housing Finance Limited (“MRHFL”) 52.16% 49% Mahindra Finance USA LLC (Joint venture with Rabobank group subsidiary) 51%(3) Mahindra Manulife Investment Management Mahindra
Slide 39: Our Journey
Our Journey 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. Private Equity fin
Slide 40: Shareholding Pattern (as on June 30, 2021)
Shareholding Pattern (as on June 30, 2021) Shareholding Pattern Top 10 Public Shareholders Life Insurance Corporation Of India 13.09% HDFC Life Insurance Company Limited Wishbone Fund, Ltd. 16.53% Government Pension Fund Global 52.16% Valiant Mauritius Partners Offshore Limited HDFC Trus
Slide 41: Business Strategy
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 40
Slide 42: Business Strategy
Business Strategy 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 Leasing Broad base
Slide 43: Extensive Branch Network
Extensive Branch Network Extensive branch network with presence in 27 states and 7 union territories in India through 1,391 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of Central East North 2 21 South West 27 1,388 1,391 35 1,284 1,321
Slide 44: Diversified Product Portfolio
Diversified Product Portfolio Loans for auto and utility vehicles, tractors, cars, commercial vehicles and construction Vehicle Financing equipments Pre-Owned Vehicles Loans for pre-owned cars, multi-utility vehicles, tractors and commercial vehicles Loans for varied purposes like project fina
Slide 45: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Foster a Digital Learning ecosystem that drives a culture of All our offices are connected to the centralised data centre in anytime-anywhere learning. Mumbai through Lease line/tablets Structu
Slide 46: Credit Rating
Credit Rating MMFSL believes that its credit rating and strong brand equity enables it to borrow funds at competitive rates Credit Rating India Ratings Outlook IND AAA Long term and Subordinated debt (incl. MLD); Bank Facilities Stable IND PP-MLD AAA emr Short term debt IND A1+ -- CARE Ratings Outlo
Slide 47: Awards & CSR Initiatives
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 46
Slide 48: Awards & Accolades, CSR Initiatives
Awards & Accolades CSR Initiatives ■ Ranked 54th among India Best Companies to Work 2021 by ■ Launched flagship program for the holistic development of our Great Place to Work ® Institute driver community and their family members. ■ India’s 30th Best workplaces in BFSI 2021 by Great Place to ■ This
Slide 49: Risk Management Policies
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 48
Slide 50: Risk Management Policies
Risk Management Policies 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 additional management ov
Slide 51: 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 52: Thank You
Thank You Transforming rural lives across the country 51
Mahindra & Mahindra Financial Services — Q1 FY2022 Earnings Presentation on 6ix