Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY2015 Earnings Presentation
41 slides from Mahindra & Mahindra Financial Services's earnings presentation, June 2014
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update June 2014
Mahindra & Mahindra Financial Services Limited Quarter Result Update JUNE - 2014 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 Fax: +91 22 2287 5485 Tel: +91
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 735 billion)*, one of India’s leading tractor and utility vehicle manufacturers • MMFSL (Mcap: Rs 146 billion)* is one of India’s leading non-banking finance companies foc
Slide 4: MMFSL Group structure
MMFSL Group structure (1) Mahindra Insurance 85% Brokers Limited (“MIBL”) Mahindra Rural Mahindra & Mahindra Limited 87.5%(2) Housing Finance Limited (“MRHFL”) 51.20% Mahindra Finance 49% USA LLC (Joint venture with Rabobank group subsidiary) Mahindra Business & Mahindra & Mahindra 100% Consulting S
Slide 5: Our Journey Thus Far
Our Journey Thus Far Crossed 3 million cumulative customer contracts Stake sale in MIBL to Inclusion resources pvt. Ltd. QIP Issue of Rs. 8.67 Bn FY 14 Maiden QIP Issue of Rs.4.26 Bn FY 13 JV with Rabobank subsidiary for tractor financing in USA FY 11 Received 12.5% equity participation Commenced ho
Slide 6: Shareholding pattern
Shareholding pattern (as on June 30, 2014) Key Shareholders Cartica Capital Ltd Government of Singapore Non ESOP Mutual Institutions Funds & Trust Wasatch Emerging Markets Small Cap Fund 5.3% 0.9% DII JP Morgan SICAV Investment Company 1.3% Mahindra & Morgan Stanley Mauritius Company Ltd.
Slide 7: Industry overview
Industry overview Transforming rural lives across the country 7
Slide 8: Automobile Finance Market to Grow by 16-18% over the next 5 years
Automobile Finance Market to Grow by 16-18% over the next 5 years Growth in New Vehicle Finance Disbursements CAGR FY13- (Rs. billion) FY11E FY12E FY13E FY14P FY18P FY18P Cars 466 503 508 471 1007 14-16% Utility Vehicles 155 180 251 239 605 18-20% Commercial Vehicles 402 471 414 309 900 16-18% Two-W
Slide 9: Auto Industry Long term growth potential
Auto Industry Long term growth potential Strong prospects in the long-term. FY03-08 FY08-13 FY14P FY13-18P Growth to be driven by increase in income of households and higher CAGR (%) CAGR (%) (%) CAGR (%) passenger vehicle penetration Cars and Uvs 17 12 (6-8) 12-14 Small Cars are expected to rec
Slide 10: 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 11: Auto Industry Volume
Auto Industry Volume Domestic Sales 1QFY15 1QFY14 Y-o-Y FY14 (Volume in „000) (Nos.) (Nos.) Growth (%) (Nos.) Passenger Vehicles (PVs) Passenger Cars / Vans 444 434 2% 1,785 UVs 171 173 (1%) 716 Commercial Vehicles (CVs) M&HCVs 50 56 (11%) 201 LCVs 91 112 (19%) 432 Three Wheelers 121 109 11% 480 Sou
Slide 12: Monsoon Update
Monsoon Update (till 23 Jul, 2014) Latest Monsoon data is not encouraging and showing a dismal picture Rainfall was normal in 14, deficient in 19 and scanty in 3 out of 36 meteorological sub-divisions The monsoon is deficient by about 26% in the southern Peninsula, 47% in Central India, 49% in
Slide 13: Crop Sowing under Stress
Crop Sowing under Stress Area under sowing for major crops Jowar, Bajra & Maize 4.84 12.76 Sugarcane 4.61 4.62 Cotton 5.60 10.06 Oilseeds 3.81 Jul-14 13.66 Jul-13 Pulses 2.16 5.42 Coarse Grains 4.84 12.76 Rice 12.74 15.42 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 Million Hectare Rain
Slide 14: Business Strategy
Business Strategy Transforming rural lives across the country 14
Slide 15: 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 16: Extensive branch network
Extensive branch network MMFSL has an extensive branch network with presence in 25 states and 5 union territories in India through 998 offices as of June 30, 2014 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 5 HP 15 24 PB UC 13 22 HAR Del
Slide 17: 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 18: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Quarter ended Quarter ended Year ended Asset Class June – 14 June – 13 March – 14 Auto/ Utility vehicles 33% 30% 32% Tractors 20% 21% 20% Cars 22% 23% 22% Commercial vehicles and 9% 13% 11% Construction equipments Pre-owned vehicles and others 16% 13% 1
Slide 19: Break up of AUM
Break up of AUM As on As on As on Asset Class June – 14 June – 13 March – 14 Auto/ Utility vehicles 30% 28% 29% Tractors 19% 19% 19% Cars 23% 24% 24% Commercial vehicles and 14% 17% 15% Construction equipments Pre-owned vehicles and others 14% 12% 13% 1. Approximate percentages 2. Dealer Advance/Tra
Slide 20: 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.15.3 Bn comprising several banks Credit Rating India Ratings Outlook Long term and Subordinated debt AAA (ind) Stable Brickwork Outlo
Slide 21: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Training programs for employees on regular All our offices are connected to the centralised basis data centre in Mumbai through Lease line/HHD 5 days induction program on product Through hand
Slide 22: Financial Information
Financial Information Transforming rural lives across the country 22
Slide 23: Key Financials
Key Financials Q1FY15 Vs Q1FY14 (Figures on standalone basis) Total income Profit after Tax Value of Asset Financed Rs 12,830 mn Rs 1,549 mn Rs 55,381 mn 17% 19% 13% Rs 10,985 mn Rs 1,912 mn Rs 63,861 mn 23
Slide 24: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) 296.17 304.97 49.53 30% 33% 240.38 38.95 174.98 27.95 12.83 FY12 FY13 FY14 1QFY15 FY12 FY13 FY14 1QFY15 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) 89.6 92.2 20% 8.83 8.87 37% 6.20 56.7 47.9 1.55 FY12
Slide 25: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 35.4% 3.9% 4.0% 3.2% 2.9% 33.0% 33.2% 33.0% 32.6% 1.9% FY12 FY13 FY14 1QFY14 1QFY15 FY12 FY13 FY14 1QFY14 1QFY15 Return on Net Worth (RONW) (3) (%) Asset Quality 22.8% 23.5% Gross NPA Net NP
Slide 26: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Quarter ended Quarter ended Year ended Particulars (Rs. in Million) June – 14 June – 13 March - 14 Revenue from operations 12,751 10,925 49,216 Other income 79 60 314 Total Revenue 12,830 10,985 49,530 Expenses: Employee benefits expense* 1,084 593 2,973 Finance co
Slide 27: Standalone Balance Sheet
Standalone Balance Sheet As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,127 1,126 1,127 b) Reserves and Surplus 51,340 45,340 49,815 Shareholders' funds 52,467 46,466 50,942 Non-current liabilities a) L
Slide 28: Standalone Balance Sheet (Cont'd)
Standalone Balance Sheet (Cont’d) As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 ASSETS Non-current assets a) Fixed Assets 1,109 1,081 1,195 b) Non-current investments 5,590 4,117 5,263 c) Deferred tax assets (Net) 3,317 2,411 3,151 d) Long-term loans and advances
Slide 29: Key Subsidiaries
Key Subsidiaries Transforming rural lives across the country 29
Slide 30: Mahindra Rural Housing Finance
Mahindra Rural Housing Finance Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 14 June – 13 March – 14 Loans disbursed 2,115 1,131 6,306 No. of Customer Contracts (Nos) 15,257 9,478 56,868 Outstanding loan book 15,190 9,645 13,550 Total income 674 422 2,125 PBT 79 35 368 PAT
Slide 31: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 14 June – 13 March – 14 Total income 266 247 1,112 Net premium 1,738 1,626 7,384 PBT 129 120 638 PAT 85 79 420 No. of Policies for the Period (nos.) 254,743 223,204 1,068,577 No. of employees (
Slide 32: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Quarter ended Quarter ended Year ended Particulars (Rs. in Million) June – 14 June – 13 March - 14 Revenue from operations 13,768 11,647 52,753 Other income 76 60 253 Total Revenue 13,844 11,707 53,006 Expenses: Employee benefits expense 1,327 1,129 4,945 Finance
Slide 33: Consolidated Balance Sheet
Consolidated Balance Sheet As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,127 1,126 1,127 b) Reserves and Surplus 53,416 46,787 51,810 Shareholders' funds 54,543 47,913 52,937 Minority Interest 375 283
Slide 34: Consolidated Balance Sheet (Cont'd)
Consolidated Balance Sheet (Cont’d) As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2014 2013 2014 ASSETS Non-current assets a) Fixed Assets 1,189 1,152 1,287 b) Non-current investments 4,071 2,752 3,790 c) Deferred tax assets (Net) 3,351 2,455 3,254 d) Long-term loans and advanc
Slide 35: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Quarter ended Quarter ended Year ended Particulars June – 14 June – 13 March – 14 RONW (Avg. Net Worth) 12.0% 16.8% 18.6% Debt / Equity 4.59:1 4.42:1 4.70:1 Capital Adequacy 18.1% 19.6% 18.0% Tier I 15.6% 16.4% 15.5% Tier II 2.5% 3.2% 2.5% EPS (Basic)
Slide 36: Spread Analysis
Spread Analysis Figures on standalone basis Quarter ended Quarter ended Year ended June – 14 June – 13 March – 14 Total Income / Average Assets 16.3% 16.9% 17.7% Interest / Average Assets 7.6% 7.2% 7.8% Gross Spread 8.7% 9.7% 9.9% Overheads / Average Assets 2.9% 3.3% 3.3% Write offs & NPA provisions
Slide 37: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) June – 14 June – 13 March – 14 Gross Non - Performing Assets 20,278 11,555 14,057 Less: NPA Provisions 10,954 6,493 8,301 Net Non – Performing Assets 9,324 5,062 5,756 Total Assets (Incl. NPA Provision) 325,318 276,810 318,622 Gross
Slide 38: Key Risk Management Practices
Key Risk Management Practices Transforming rural lives across the country 38
Slide 39: 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 40: 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 41: Thank You
Thank You Transforming rural lives across the country 41
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