Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q4 FY2016 Earnings Presentation
43 slides from Mahindra & Mahindra Financial Services's earnings presentation, May 2016
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update March 2016
Mahindra & Mahindra Financial Services Limited Quarter Result Update MARCH - 2016 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 822 billion)*, one of India’s leading tractor and utility vehicle manufacturers • MMFSL (Mcap: Rs 157 billion)* is one of India’s leading non-banking finance companies foc
Slide 4: MMFSL Group structure
MMFSL Group structure (1) 85% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 87.5%(2) Mahindra Rural Housing Finance Limited (“MRHFL”) 51.20% 49% Mahindra Finance USA LLC (Joint venture with Rabobank group Mahindra & Mahindra subsidiary) Financial Services Limited Mahindra A
Slide 5: Our Journey Thus Far
Our Journey Thus Far Long term debt rating upgraded to AAA by India Ratings and Brickwork CARE Ratings assigned AAA rating to long term debt Reach extended to over 1100 offices FY 15 Crossed 3 million cumulative customer contracts FY 14 Stake sale in MIBL to Inclusion Resources Pvt. Ltd. QIP Issue o
Slide 6: Shareholding pattern
Shareholding pattern (as on March 31, 2016) Top 10 Shareholders Franklin Templeton Investment Funds Non ESOP Amansa Holdings Private Limited Mutual Institutions Trust Aranda Investments (Mauritius) Pte Ltd Funds & 4.8% 0.7% DII 9.6% ICICI Prudential Balanced Advantage Fund Life Insurance C
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 (% growth over previous FY12E FY13E FY14E FY15E FY16P FY17P FY15- yr) FY20P Cars 8% (7%) (6%) 3% 11-13% 12-14% 15-17% Utility Vehicles 16% 39% (6%) 1% 15-17% 12-14% 18-20% Commercial Ve
Slide 9: Auto Industry Long term growth potential
Auto Industry Long term growth potential Strong prospects in the long-term. FY05-10 FY10-15 FY15P FY15-20P Growth to be driven by increase in CAGR CAGR CAGR income of households and higher (%) passenger vehicle penetration (%) (%) (%) Cars and Uvs 13 5 4 11-13 Small Cars to drive growth in the l
Slide 10: Overall Demand Drivers
Overall Demand Drivers Passenger Vehicles Growth CAGR 18% Increase in affordability 14% 11-13% 12-14% 11-13% 12% 13% 13% 8-10% 11% 10% Growth in Addressable Market 8% 5% 5% Entry of New Players and New Model 3% Launches -2% -5% Increase in dealerships and access to Small Cars Sedans Uvs+Vans
Slide 11: Auto Industry Volume
Auto Industry Volume Domestic Sales FY16 FY15 Y-o-Y FY14 (Volume in ‘000) (Nos.) (Nos.) Growth (%) (Nos.) Passenger Vehicles (PVs) Passenger Cars / Vans 2,025 1,877 7.9% 1,791 UVs 764 723 5.7% 717 Commercial Vehicles (CVs) M&HCVs 302 232 30.2% 200 LCVs 382 382 0% 432 Three Wheelers 538 532 1.1% 480
Slide 12: Housing Finance Growth
Housing Finance Growth Growth in Housing Finance Disbursements (Rs.bn) 10000 9000 8,303 Growth in disbursements to be 8000 supported by rising focus of 7000 6000 developers on the affordable 5000 housing segment 4000 3,302 3000 2000 1,752 Tier II and III cities to drive 990 1000 552 growth 0 200
Slide 13: Business Strategy
Business Strategy Transforming rural lives across the country 13
Slide 14: 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 15: Extensive branch network
Extensive branch network MMFSL has an extensive branch network with presence in 26 states and 5 union territories in India through 1167 offices as of March 31, 2016 Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 11 HP 27 38 PB UC 19 27 HR D
Slide 16: 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 17: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Year ended Year ended Year ended Asset Class March – 16 March – 15 March – 14 Auto/ Utility vehicles 30% 33% 32% Tractors 15% 18% 20% Cars 22% 22% 22% Commercial vehicles and 11% 9% 11% Construction equipments Pre-owned vehicles 16% 15% 13% Others 6% 3%
Slide 18: Break up of AUM
Break up of AUM As on As on As on Asset Class March – 16 March – 15 March – 14 Auto/ Utility vehicles 31% 31% 29% Tractors 17% 18% 19% Cars 24% 23% 24% Commercial vehicles and 12% 13% 15% Construction equipments Pre-owned vehicles 10% 10% 9% Others 6% 5% 4% 1. Approximate percentages 2. As on 31st M
Slide 19: 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 Long term and Subordinated debt AAA (ind) Stable Short term debt IND A1+ -- CARE Ratings Outlook Long term and Subordinated debt AAA -- Br
Slide 20: Broad based Liability Mix
Broad based Liability Mix Total consortium size of Rs.15.3 Bn comprising several banks Funding Mix by Investor profile (Mar’ 16) Funding Mix by type of Instrument (Mar’ 16) Banks for Assignment Assignment CP, ICD (Rs.14.06 (Rs.14.06 bn) (Rs.30.69 mn) 5% bn) 5% Bank Term Insurance Co. & 10% Loan In
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 knowledge, T
Slide 22: Financial Information
Financial Information Transforming rural lives across the country 22
Slide 23: Key Financials
Key Financials Q4FY16 Vs Q4FY15 (Figures on standalone basis) Total Income Profit after Tax Value of Asset Financed Rs 16,897 mn Rs 3,703 mn Rs 68,107 mn 10% 11% 8% Rs 15,373 mn Rs 3,334 mn Rs 63,027 mn FY16 Vs FY15 (Figures on standalone basis) Total Income Profit after Tax Value of Asset Financed
Slide 24: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) 15% 15% 366.58 329.30 59.05 296.17 55.85 49.53 240.38 38.95 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) 11% 107.0 8.83 8.87 99.7 8.32 89.6 6.73 78.3 FY13 FY14 F
Slide 25: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 4.0% 36.1% 3.2% 2.5% 33.0% 1.8% 32.6% 32.6% FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 Return on Net Worth (RONW) (3) (%) Asset Quality 23.5% Gross NPA Net NPA 18.6% 8.0% 15.5% 5.9% 4.4% 11.4%
Slide 26: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Particulars (Rs. in Million) Q4FY16 Q3FY16 Q-o-Q Q4FY15 Y-o-Y FY16 FY15 Revenue from operations 15,995 13,879 15.2% 14,373 11.3% 56,468 52,799 Securitisation Income (net) 726 123 490.2% 834 (12.9%) 2,064 2,562 Less: Finance cost 6,711 6,696 0.2% 6,373 5.3% 26,393 2
Slide 27: Standalone Balance Sheet
Standalone Balance Sheet As on Mar 31 As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2016 2015 2014 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,129 1,128 1,127 b) Reserves and Surplus 59,752 55,566 49,815 Shareholders' funds 60,881 56,694 50,942 Non-current liabilities a) L
Slide 28: Standalone Balance Sheet (Cont'd)
Standalone Balance Sheet (Cont’d) As on Mar 31 As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2016 2015 2014 ASSETS Non-current assets a) Fixed Assets 1,135 1,100 1,195 b) Non-current investments 9,923 7,599 5,263 c) Deferred tax assets (Net) 5,853 4,153 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 Year ended Year ended Year ended Particulars (Rs. million) March – 16 March – 15 March – 14 Loans disbursed 15,525 9,896 6,306 No. of Customer Contracts (Nos) 125,074 81,960 56,868 Outstanding loan book 32,645 20,983 13,550 Total income 4,954 3,284 2,125 PBT 967 673 36
Slide 31: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Year ended Year ended Year ended Particulars (Rs. million) March – 16 March – 15 March – 14 Total income 1,492 1,262 1,112 Net premium 10,870 8,939 7,384 PBT 752 653 638 PAT 485 429 420 No. of Policies for the Period (nos.) 1,330,929 1,137,981 1,068,577 No. of empl
Slide 32: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Year ended Year ended Year ended Particulars (Rs. in Million) March - 16 March - 15 March - 14 Revenue from operations 65,539 60,211 52,753 Other income 436 398 253 Total Revenue 65,975 60,609 53,006 Expenses: Employee benefits expense 7,041 5,671 4,945 Finance c
Slide 33: Consolidated Balance Sheet
Consolidated Balance Sheet As on Mar 31 As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2016 2015 2014 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,129 1,128 1,127 b) Reserves and Surplus 63,565 58,299 51,810 Shareholders' funds 64,694 59,427 52,937 Minority Interest 675 493
Slide 34: Consolidated Balance Sheet (Cont'd)
Consolidated Balance Sheet (Cont’d) As on Mar 31 As on Mar 31 As on Mar 31 Particulars (Rs. in Million) 2016 2015 2014 ASSETS Non-current assets a) Fixed Assets 1,291 1,192 1,287 b) Non-current investments 6,522 5,597 3,790 c) Deferred tax assets (Net) 5,992 4,212 3,254 d) Long-term loans and advanc
Slide 35: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Year ended Year ended Year ended Particulars March – 16 March – 15 March – 14 RONW (Avg. Net Worth) 11.4% 15.5% 18.6% Debt / Equity 4.84:1 4.63:1 4.70:1 Capital Adequacy 17.3% 18.3% 18.0% Tier I 14.6% 15.5% 15.5% Tier II 2.7% 2.8% 2.5% EPS (Basic) (Rs
Slide 36: Spread Analysis
Spread Analysis Figures on standalone basis Year ended Year ended Year ended March – 16 March – 15 March – 14 Total Income / Average Assets 16.3% 17.1% 17.7% Interest / Average Assets 7.3% 7.7% 7.8% Gross Spread 9.0% 9.4% 9.9% Overheads / Average Assets 3.2% 3.1% 3.3% Write offs & NPA provisions / A
Slide 37: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) March – 16 March – 15 March – 14 Gross Non - Performing Assets 32,242* 20,997 14,057 Less: NPA Provisions 19,891 12,815 8,301 Net Non – Performing Assets 12,351 8,182 5,756 Total Assets (Incl. NPA Provision) 400,764 353,895 318,622 G
Slide 38: Awards & Accolades
Awards & Accolades Transforming rural lives across the country 38
Slide 39: Awards and Accolades
Awards and Accolades Mahindra Finance has been appraised and rated at People CMM® Maturity Level 3 Mahindra Finance included on Dow Jones Sustainability Index (DJSI) - Emerging Market Trends for 3rd years in a row. We also got featured in RobecoSAM Sustainability Yearbook 2015 Mahindra Finance
Slide 40: Key Risk Management Practices
Key Risk Management Practices Transforming rural lives across the country 40
Slide 41: Conservative Risk Management Policies
Conservative Risk Management Policies Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL 5 and <= 16 10% > 4* and <= 11 10% > 16 and <= 28 20% > 11 and <= 24 50% > 28 and <= 52 30% > 24 months 100% > 52 months 50% Key Risks & Management Strategies Key Risks Management Strategies
Slide 42: 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 43: Thank You
Thank You Transforming rural lives across the country 43
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