Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q2 FY2021 Earnings Presentation
48 slides from Mahindra & Mahindra Financial Services's earnings presentation, Oct 26, 2020
Slide 1: Cover letter to stock exchanges
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 October, 2020 The General Manager-Department of The Manager-Listing Department, Corporate Services, National Stoc
Slide 2: Quarter Result Update September 2020
Mahindra & Mahindra Financial Services Limited Quarter Result Update September - 2020 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 66526000 Fax
Slide 3: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 2
Slide 4: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 777 billion)* About MMFSL: MMFSL (Mcap: Rs 166 billion)*, one of India’s leading non-banking finance companies focused in the rural and semi-urban sector
Slide 5: MMFSL Group structure
MMFSL Group structure (1) 80% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 98.43%(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 6: Our Journey
Our Journey Commenced housing finance Maiden Retail NCD Issue Completed Rights business through MRHFL Maiden QIP Issue of Rs. 4.26 Bn of Rs. 1000 crores. Issue of Rs. 3089 Oversubscribed over 7 crores. Raised Rs. 4.14 Bn through JV with Rabobank subsidiary for times over base issue size Tier – I Cap
Slide 7: Shareholding Pattern (as on September 30, 2020)
Shareholding Pattern (as on September 30, 2020) Shareholding Pattern Top 10 Public Shareholders HDFC Life Insurance Company Limited 13.64% Valiant Mauritius Partners Offshore Limited Life Insurance Corporation Of India 12.46% Government Pension Fund Global 52.16% Wishbone Fund, Ltd. 21.41%
Slide 8: Industry Overview
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 7
Slide 9: Auto Industry Volume
Auto Industry Volume Domestic Sales 1HFY21 1HFY20 Y-o-Y FY20 FY19 Y-o-Y (Volume in ‘000) (Nos.) (Nos.) Growth (%) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 506 815 (38%) 1,698 2,219 (23%) UV’s 374 518 (28%) 1,075 1,159 (7%) Commercial Vehicles (CVs) M&HCVs 29 123 (76%)
Slide 10: Automobile Finance Market: 5 years Projected Growth
Automobile Finance Market: 5 years Projected Growth Segment-wise growth in disbursement FY 14 E CAGR FY 20 E FY 21 (P) FY 22 (P) FY 23 (P) CAGR (Rs. Bn.) FY 14 – FY 20 (Rs. Bn.) (Rs. Bn.) (Rs. Bn.) (Rs. Bn.) FY 20 – FY 23 (P) Passenger vehicle 696 8% 1,128 875 1,059 1,218 3% Commercial vehicle 319 1
Slide 11: Housing Finance Growth
Housing Finance Growth Housing Portfolio Size and Market Share Rs. Tn. HFCs Banks Housing credit growth expected to slow down post Covid-19. 25 Expect credit outstanding to grow by 3%-4% in FY 21 21.1 18.4 20 Share of Banks gradually increasing from 61% in FY18 to 66%- 15 13.8 67% in FY 21/22 9.
Slide 12: Business Strategy
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 11
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 Extensive branch network with presence in 27 states and 7 union territories in India through 1,256 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 2 20 35 28 20 1,284 1,321 1,322 1,256 34 17 3 2 1,182 73 126 40
Slide 15: 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 16: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives All our offices are connected to the centralised data centre in Training programs for employees on regular basis Mumbai through Lease line/tablets 5 days induction program on product knowledge,
Slide 17: Break down of estimated value of Assets Financed
Break down of estimated value of Assets Financed on standalone basis Half Year ended Half Year ended Year ended Asset Class Sep – 20 Sep – 19 March – 20 Auto/ Utility vehicles 32% 27% 28% Tractors 26% 16% 17% Cars 21% 19% 19% Commercial vehicles and Construction equipments 5% 17% 15% Pre-owned vehic
Slide 18: Break down of Business Assets
Break down of Business Assets on standalone basis As on As on As on Asset Class September – 20 September – 19 March – 20 Auto/ Utility vehicles 28% 26% 27% Tractors 17% 17% 17% Cars 21% 20% 21% Commercial vehicles and Construction equipments 18% 19% 19% Pre-owned vehicles 9% 9% 10% SME and Others 6%
Slide 19: Break down by Geography
Break down by Geography on standalone basis WEST CENTRAL 10% CENTRAL 14% WEST 12% 19% SOUTH EAST Loan Assets 27% Disbursement EAST 20% as on September, 2020 SOUTH 1H FY2021 24% 18% NORTH NORTH 29% 28% NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan, Uttar Pr
Slide 20: 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 21: Broad Based Liability Mix
Broad Based Liability Mix on standalone basis All figures in INR million Working Capital Consortium Facility at Rs. 20,000 mn. comprising several banks Funding Mix by type of Instrument (Sept’20) Funding Mix by type of Instrument (Sept’20) Investor Type Amount (INR mn.) % Share Instrument Type Amoun
Slide 22: ALM Position and Liability Maturity
ALM Position and Liability Maturity All figures in INR billion Cumulative Inflow Cumulative Outflow Cumulative Surplus (%) - RHS 700 656 300% 600 576 250% 511 500 447 200% 400 312 150% 300 210 188 100% 200 149 110 102 100 84 56 50% 23 32 - 0% Upto Upto Upto Upto Upto Upto Upto 1 month 2 months 3 mon
Slide 23: Financial Information - Standalone
Company Overview Industry Overview Business Strategy Financial Information - Standalone Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 22
Slide 24: Key Financials
Key Financials on standalone basis Total Income Profit after Tax Value of Asset Financed Q2 FY 21 Rs. 26.5 billion Rs. 3.0 billion Rs. 54.0 billion 4% 21% 45% Q2 FY 20 Rs. 25.4 billion Rs. 2.5 billion Rs. 97.5 billion H1 FY 21 Rs. 53.0 billion Rs. 4.6 billion Rs. 88.9 billion 7% 43% 56% H1 FY 20 Rs.
Slide 25: Growth Trajectory
Growth Trajectory on standalone basis Loan Book (1) (Rs. Bn) Revenues (Rs. Bn) IND-AS IND-AS 102.45 649.93 643.89 88.10 612.50 637.93 66.85 485.47 49.53 53.04 FY18 FY19 FY20 H1FY20 H1FY21 FY18 FY19 FY20 H1FY20 H1FY21 Profit after Tax (2) (Rs. Bn) Book Value Per Share (3) (Rs.) IND-AS IND-AS 15.57 18
Slide 26: Financial Performance
Financial Performance on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) IND-AS IND-AS 2.6% 39.8% 41.2% 2.2% 38.0% 37.3% 26.3% 1.3% 1.2% 0.9% FY18 FY19 FY20 H1FY20 H1FY21 FY18 FY19 FY20 H1FY20 H1FY21 Return on Net Worth (RONW) (%) Asset Quality (%) IND-AS IND-AS Gross NP
Slide 27: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in Million) Q2FY21 Q1FY21 Q-o-Q Q2FY20 Y-o-Y FY 20 Revenue from operations (A) 26,129 26,405 -1.0% 24,864 5.1% 100,979 Less: Finance cost (B) 12,216 12,646 -3.4% 12,022 1.6% 48,288 NII (C= A+B) 13,913 13,759 1.1% 12,842 8.3% 52,691 Other Income (D) 3
Slide 28: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in Million) H1FY21 H1FY20 Y-o-Y FY20 Revenue from operations (A) 52,534 48,804 7.6% 100,979 Less: Finance cost (B) 24,862 23,304 6.7% 48,288 NII (C= A+B) 27,672 25,500 8.5% 52,691 Other Income (D) 511 730 -30.0% 1,473 Total Income (E=C+D) 28,183 26,2
Slide 29: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Sep 30, 2020 As on Sep 30, 2019 As on Mar 31, 2020 ASSETS Financial Asset a) Cash and cash equivalents 10,673 4,148 6,768 b) Bank balance other than (a) above 23,415 7,213 7,490 c) Derivative financial instruments 213 116 929 d) Trade Recei
Slide 30: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in Million) As on Sep 30, 2020 As on Sep 30, 2019 As on Mar 31, 2020 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 985 528 402 b) Payables i) Trade payables 5,264 7,782 6,063 ii) Other payables 222 252 294 c) Debt
Slide 31: Summary & Key Ratios
Summary & Key Ratios on standalone basis As per IND-AS Half year ended Half year ended Year ended Particulars Sep – 20 Sep – 19 March – 20 RONW (Avg. Net Worth) ^ 7.5% 5.9% 8.1% Debt / Equity 4.05:1 5.25:1 5.23:1 Capital Adequacy 25.1% 19.7% 19.6% Tier I 20.8% 15.2% 15.4% Tier II 4.3% 4.5% 4.2% EPS
Slide 32: Spread Analysis
Spread Analysis on standalone basis As per IND-AS Half year ended Half year ended Year ended Particulars Sep – 20 Sep – 19 March – 20 Total Loan Income / Average Business Assets 14.8% 14.6% 14.9% Total Income / Average Assets 13.9% 14.4% 14.5% Interest / Average Assets 6.5% 6.8% 6.8% Gross Spread 7.
Slide 33: NPA Analysis
NPA Analysis on standalone basis Particulars (Rs. in Million) except figures in % As on Sep 30, 2020 As on Sep 30, 2019 Mar 31, 2020 Business Assets (including Provisions) 677,732 660,584 680,890 Gross NPA (Stage 3) 47,668 52,038 57,467 Less: ECL Provisions (Stage 3) 16,730 10,172 17,802 Net NPA (St
Slide 34: Impact of Supreme Court order and Covid-19 Management overlay
Impact of Supreme Court order and Covid-19 Management overlay on standalone basis Impact of Supreme Court Order pertaining to non-classification of overdue accounts under moratorium as NPA Without reclassification After reclassification & as reported Reclassified Assets ^ Particulars Count Amount %
Slide 35: Financial Information - Consolidated
Company Overview Industry Overview Business Strategy Financial Information - Consolidated Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 34
Slide 36: Key Financials
Key Financials on consolidated basis Total Income Profit after Tax Value of Asset Financed Q2 FY 21 Rs. 30.7 billion Rs. 3.5 billion Rs. 55.0 billion 5% 34% 46% Q2 FY 20 Rs. 29.4 billion Rs. 2.6 billion Rs. 103.8 billion H1 FY 21 Rs. 61.4 billion Rs. 7.8 billion Rs. 99.2 billion 6% 111% 54% H1 FY 20
Slide 37: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Half year ended Half year ended Particulars (Rs. in Million) Y-o-Y FY20 Sep – 20 Sep – 19 Revenue from operations (A) 60,917 57,358 6.2% 118,830 Less: Finance cost (B) 27,697 26,085 6.2% 53,906 NII (C= A+B) 33,220 31,273 6.2% 64,924 Other Income (D) 475 391 21.5% 1
Slide 38: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in Million) As on Sep 30, 2020 As on Sep 30, 2019 As on Mar 31, 2020 ASSETS Financial Asset a) Cash and cash equivalents 26,069 4,447 7,826 b) Bank balance other than (a) above 25,626 7,213 7,490 c) Derivative financial instruments 213 116 929 d) Trade Rec
Slide 39: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in Million) As on Sep 30, 2020 As on Sep 30, 2019 As on Mar 31, 2020 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 985 528 402 b) Payables i) Trade payables 6,744 9,081 6,932 ii) Other payables 222 252 296 c) Deb
Slide 40: Key Subsidiaries
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 39
Slide 41: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Accounting Basis As per IND-AS Half Year ended Half Year ended Year ended Particulars (Rs. million) except figures in % September – 20 September – 19 March – 20 Loans disbursed 1,057 10,280 18,764 No. of Customer Contracts (nos.) 3,064 52,663 95,523 Loans & Adv
Slide 42: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Accounting Basis As per IND-AS Half year ended Half year ended Year ended Particulars (Rs. million) Sep – 20 Sep – 19 March – 20 No. of Policies for the Period (nos.) 534,157 1,092,146 2,233,711 Net Premium 6,873 9,018 20,791 Total income 1,013 1,578 3,369 PBT 77 2
Slide 43: Awards & Accolades
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 42
Slide 44: Awards and Accolades
Awards and Accolades ■ Awarded the Indian Oil Logistics Award CV Financer of the Year 2019; ■ Awarded the 1st position for Excellence in Cost Management – 2018 at the 16th National Awards for “Excellence in Cost Management – 2018” in Banking, Financial Services and Insurance Category; ■ Awarded the
Slide 45: Risk Management Policies
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 44
Slide 46: 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 47: 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 48: Thank You
Thank You Transforming rural lives across the country 47
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