Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY2014 Earnings Presentation
39 slides from Mahindra & Mahindra Financial Services's earnings presentation, January 2014
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update
Mahindra & Mahindra Financial Services Limited Quarter Result Update DECEMBER - 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 557 billion)*, one of India’s leading tractor and utility vehicle manufacturers • MMFSL (Mcap: Rs 152 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 December 31, 2013) Key Shareholders Cartica Capital Ltd Non ESOP Wasatch Emerging Markets Small Cap Fund Mutual Institutions Trust Funds & 4.8% 1.0% DII TIAA-CREF Institutional mutual funds 2.2% JP Morgan SICAV Investment Company Mahindra & Morgan Stanley Asia (
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 Domestic Sales 9MFY14 9MFY13 Y-o-Y (Volume in „000) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 1,293 1,361 (5%) UVs 533 578 (8%) Commercial Vehicles (CVs) M&HCVs 145 198 (27%) LCVs 326 378 (14%) Three Wheelers 365 402 (9%) Source: Crisil 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 710 offices as of December 31, 2013 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 5 HP 15 24 710 PB UC 22 10
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 Nine months ended Nine months ended Year ended Segments December – 13 December – 12 March–13 Auto/ Utility vehicles 31% 30% 31% Tractors 21% 19% 19% Cars 22% 25% 24% Commercial vehicles and 11% 14% 14% Construction equipments Pre-owned vehicles and othe
Slide 17: Break up of AUM
Break up of AUM As on As on As on Segments December – 13 December – 12 March – 13 Auto/ Utility vehicles (M&M) 27% 29% 29% Tractors (M&M) 19% 19% 19% Cars and Non M&M UVs, Tractors & 34% 32% 32% SCVs Commercial vehicles and 11% 13% 13% Construction equipments Pre-owned vehicles and others 9% 7% 7% 1
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 710 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 Q3FY14 Vs Q3FY13 (Figures on standalone basis) Total income Profit after Tax Value of Asset Financed Rs 12,711 mn Rs 1,641 mn Rs 73,282 mn 27% 18% 8% Rs 10,008 mn Rs 2,002 mn Rs 68,001 mn 9MFY14 Vs 9MFY13 (Figures on standalone basis) Total income Profit after Tax Value of Asset Finan
Slide 22: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) 38.95 300.43 40% 35.82 39% 240.38 27.95 174.98 19.78 124.02 FY11 FY12 FY13 9MFY14 FY11 FY12 FY13 9MFY14 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) 8.83 88.5 38% 78.3 6.20 28% 5.77 4.63 56.7 47.9 FY11
Slide 23: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 4.1% 4.0% 36.3% 3.9% 35.4% 3.5% 34.3% 2.7% 33.2% 32.6% FY11 FY12 FY13 9MFY13 9MFY14 FY11 FY12 FY13 9MFY13 9MFY14 Return on Net Worth (RONW) (3) (%) Asset Quality 22.8% 23.5% Gross NPA Net NP
Slide 24: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Nine months ended Nine months ended Year ended Particulars (Rs. in Million) December – 13 December – 12 March - 13 Revenue from operations 35,614 27,459 38,567 Other income 209 227 380 Total Revenue 35,823 27,686 38,947 Expenses: Employee benefits expense 1,965 1,6
Slide 25: Standalone Balance Sheet
Standalone Balance Sheet As on Dec 31 As on Dec 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,126 1,126 1,126 b) Reserves and Surplus 49,212 42,456 43,420 Shareholders' funds 50,338 43,582 44,546 Non-current liabilities a) L
Slide 26: Standalone Balance Sheet (Cont'd)
Standalone Balance Sheet (Cont’d) As on Dec 31 As on Dec 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 ASSETS Non-current assets a) Fixed Assets 1,145 1,020 1,068 b) Non-current investments 4,891 2,922 3,451 c) Deferred tax assets (Net) 2,471 2,066 2,382 d) Long-term loans and advances
Slide 27: Key Subsidiaries
Key Subsidiaries Transforming rural lives across the country 27
Slide 28: Mahindra Rural Housing Finance
Mahindra Rural Housing Finance Nine months ended Nine months ended Year ended Particulars (Rs. million) December – 13 December – 12 March – 13 Loans disbursed 3,917 2,812 4,329 No. of Customer Contracts (Nos) 33,387 37,913 61,332 Outstanding loan book 11,689 7,561 8,795 Total income 1,466 970 1,404
Slide 29: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Nine months ended Nine months ended Year ended Particulars (Rs. million) December – 13 December – 12 March – 13 Total income 787 606 863 Net premium 5,019 3,727 5,538 PBT 440 351 512 PAT 290 237 344 No. of Policies for the Period (nos.) 758,899 588,745 802,829 No.
Slide 30: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Nine months ended Nine months ended Year ended Particulars (Rs. in Million) December – 13 December – 12 Mar - 13 Revenue from operations 38,090 29,093 40,950 Other income 155 138 179 Total Revenue 38,245 29,231 41,129 Expenses: Employee benefits expense 3,573 2,8
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet As on Dec 31 As on Dec 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,126 1,125 1,126 b) Reserves and Surplus 50,980 43,601 44,670 Shareholders' funds 52,106 44,726 45,796 Minority Interest 330 92 2
Slide 32: Consolidated Balance Sheet (Cont'd)
Consolidated Balance Sheet (Cont’d) As on Dec 31 As on Dec 31 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 ASSETS Non-current assets a) Fixed Assets 1,232 1,074 1,137 b) Non-current investments 3,418 1,986 2,417 c) Deferred tax assets (Net) 2,536 2,107 2,421 d) Long-term loans and advanc
Slide 33: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Nine months ended Nine months ended Year ended Particulars December – 13 December – 12 March – 13 RONW (Avg. Net Worth) 16.0% 20.0% 23.5% Debt / Equity 4.84:1 4.18:1 4.24:1 Capital Adequacy 18.6% 19.8% 19.7% Tier I 15.7% 17.3% 17.0% Tier II 2.9% 2.5%
Slide 34: Spread Analysis
Spread Analysis Figures on standalone basis Nine months ended Nine months ended Year ended December – 13 December – 12 March – 13 Total Income / Average Assets 17.1% 17.5% 18.0% Interest / Average Assets 7.6% 7.4% 7.4% Gross Spread 9.5% 10.1% 10.6% Overheads / Average Assets 3.3% 3.4% 3.5% Write off
Slide 35: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) December – 13 December – 12 March – 13 Gross Non - Performing Assets 15,153 10,001 7,630 Less: NPA Provisions 8,414 6,160 5,030 Net Non – Performing Assets 6,739 3,841 2,600 Total Assets (Incl. NPA Provision) 317,287 245,049 256,067
Slide 36: Key Risk Management Practices
Key Risk Management Practices Transforming rural lives across the country 36
Slide 37: 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 38: 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 39: Thank You
Thank You Transforming rural lives across the country 39
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