Sammaan Capital Ltd · NSE:SAMMAANCAP
Sammaan Capital — Indiabulls Housing Finance — Investor Presentation (October 2017)
60 slides from Sammaan Capital's investor presentation, Oct 23, 2017
Slide 1: Indiabulls Housing Finance
Indiabulls HOUSING FINANCE
Slide 2: Safe Harbour Statement
Safe Harbour Statement This document contains certain forward-looking statements based on current expectations of Indiabulls Housing Finance Ltd.’s (CIN: L65922DL2005PLC136029) management. Actual results may vary significantly from the forward-looking statements in this document due to various risks
Slide 3: Contents
Contents Pg. No. 1. Business Update 04 2. Indian Home Loans Market 07 3. Financial and Operational Highlights 21 4. LAP Grading 31 5. Liabilities Profile 37 6. eHome Loans 43 7. Corporate Social Responsibility 48 8. Distribution Network, Ratings, Key Ratios, Valuations and Shareholding 50 9. Detaile
Slide 4: Business Update
Indiabulls HOUSING FINANCE Business Update
Slide 5: Our Journey
Our Journey 2017-18 Credit rating upgraded to 2016-17 523.8* AAA by ICRA (A Moody’s Associate) 2015-16 422.9 Balance sheet: ₹ 1.04 Tn.; Net worth: ₹121 Bn Launched India’s first digital home loans platform – eHome Loans 283.9 IBHFL included in Nifty50 index 2014-15 Balance Sheet: ₹ 764.4 Bn,
Slide 6: Business Update: Key Financial Highlights
Business Update Key Financial Highlights: Q1 FY 17-18 Y-o-Y Q1 FY 17-18 Q1 FY 16-17 Growth (%) Balance Sheet (₹ Bn) 1,066.12 820.69 29.9% Loan Assets (₹ Bn) 944.51 710.26 33.0% Total Revenues (₹ Bn) 32.25 25.97 24.2% NII (₹ Bn) 13.24 10.53 25.7% PAT (₹ Bn) 7.88 6.30 25.1% Key Financial Highlights: F
Slide 7: Indian Home Loans Market
Indiabulls HOUSING FINANCE Indian Home Loans Market
Slide 8: Favourable Macros for Mid-Income Affordable Housing
Favourable Macros for Mid-Income Affordable Housing Strong structural drivers and government focus: “Housing for All by 2022” ‒ Mid-income mass housing covered under Pradhan Mantri Awas Yojana (PMAY) scheme ‒ Homebuyers can withdraw from accumulated Employees’ Provident Fund (EPF) corpus for both do
Slide 9: Favourable Macros for Mid-Income Affordable Housing
Favourable Macros for Mid-Income Affordable Housing RBI, SEBI and IRDA – Regulatory agencies working in coordination towards “Housing for All by 2022” ‒ SEBI has increased cap on additional exposure to AA (and above) rated HFCs from 25% to 40% in February 2017, the only sector enjoying limit above 2
Slide 10: Unlocking of EPF Corpus for Purchasing a House and Servicing Home Loan EMIs
Unlocking of EPF Corpus for Purchasing a House and Servicing Home Loan EMIs • Employee Provident Fund Organisation (EPFO) members can withdraw up to 90% of their accumulated corpus for purchase or construction of a house • The balance, unutilised EPF corpus can be further withdrawn to service home l
Slide 11: PMAY and Tax Incentives for Mid-Income Affordable Housing
PMAY and Tax Incentives for Mid-Income Affordable Housing Tremendous boost from expansion of coverage to mid-income affordable housing under Pradhan Mantri Awas Yojana (PMAY) - People earning up to ₹ 150,000 per month now covered under the scheme for purchase of a house of carpet area up to 1,185 Sq
Slide 12: PMAY and Tax Incentives for Mid-Income Affordable Housing
PMAY and Tax Incentives for Mid-Income Affordable Housing Illustration for Indiabulls Housing’s average Home Loan - House value : ₹ 3,500,000 - Home loan amount : ₹ 2,400,000 (Loan to value of 70%) - PMAY subsidy : ₹ 230,156 - Net loan amount : ₹ 2,169,844 Principal Repayment Opening Loan Interest P
Slide 13: EMI Smaller than Rent Cheque
EMI Smaller than Rent Cheque: PMAY and Tax Incentive for Mid-Income Affordable Housing Rental Yield v/s Home Loan Cost 5.0% 4.0% 3.4% 3.5% 3.9% 3.1% 3.4% 3.2% 2.3% 2.9% 2.6% 2.6% 2.7% 0.30% Rental yield Effective Interest Rate on Home Loans with PMAY (0.30%) Source: NHB; Industry reports Increasing
Slide 14: Growth Momentum in Mid-Income Affordable Housing
Growth Momentum in Mid-Income Affordable Housing • According to NHB data, disbursals of sub ₹ 2.5 Mn home loans grew by 33% in FY17 driving growth in overall home loan disbursals by 23%. Disbursals of sub ₹ 2.5 Mn home loans now form 76% of all home loan disbursals - Supply and sale of affordable ho
Slide 15: Growth Momentum in Mid-Income Affordable Housing
Growth Momentum in Mid-Income Affordable Housing • Primary residential sales across the country’s top 8 cities increased 21% sequentially in Jan-Mar over the previous Oct-Dec quarter1 - Kolkata : 47%, Hyderabad : 43%, Ahmedabad : 30%, Delhi -NCR region : 24.5%, Mumbai : 23.6% - Y-o-Y growth was stil
Slide 16: Commercial Office Space Absorption
Commercial Office Space Absorption • Office space leasing at ₹ 50 to ₹ 70 per sq. ft. per month (~ 1 USD) is a lead indicator of housing demand. As a rule of thumb, 100 sq.ft. of office space requires almost 1,000 sq.ft. of residential space • Commercial office space absorption was at an all time hi
Slide 17: Housing Potential: Driven by Favourable Demographics
Housing Potential: Driven by Favourable Demographics • Urban housing requirement: estimated at 45 million units by 20221 • Demand continues to increase due to rapid urbanization, which is expected to rise to 40% by 20302, and growing trend of nuclear families 88% 81% 41% 26% 29% 17% 20% 9.4% India T
Slide 18: Strong Structural Drivers and Government Focus
Strong Structural Drivers and Government Focus Measures in the last 18 months: Boost to the Housing Sector Pradhan Mantri Subsidy eligibility under Pradhan Mantri Awas Yojana (PMAY) enhanced to cover up to ₹ 12 lakh of Awas Yojana (PMAY) home loan – reduces effective home loan rates to 0.30% for mid
Slide 19: Mortgage Market Growth
Mortgage Market Growth Growing HFC Market Share in a Steadily Expanding Home Loans Market 17% 18% CAGR HFC CAGR: 21% 14,405 12,384 10,650 40% 8,887 40% 7,526 39% 6,249 38% 5,538 37% 4,595 36% 34% 33% Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Banks' Share HFCs' Share (Amounts in ₹ Bn) R
Slide 20: No Regulatory Arbitrage: Regulatory Regime for HFCs at par with Banks
No Regulatory Arbitrage: Regulatory Regime for HFCs at par with Banks Parameters HFCs Banks NPA Recognition 90 dpd 90 dpd CRAR 12% 9% - Tier 1 6% 6% Standard Asset Housing Loans 0.4% 0.4% Provisions Others 1% 0.25-1% SARFAESI Coverage Yes Yes • HFCs are regulated by National Housing Bank (NHB), a wh
Slide 21: Financial and Operational Highlights
Financial and Operational Highlights 21
Slide 22: Business Summary
Business Summary • Balance Sheet : ₹ 1.07 Trillion • Loans Outstanding : ₹ 944.51 Bn (June 30, 2017) : (US$ 14.53 Bn) • Loan Assets CAGR (5 years) : 27% • Cumulative Loans to Retail Customers : 936,797 • Cumulative Loans Disbursed till date : ₹ 1.74 Tn (US$ 26.74 Bn) • Cost to Income Ratio (Q1 FY 20
Slide 23: Consistent Track Record
Consistent Track Record Balance Sheet Loan Assets Revenue CAGR: 27% CAGR: 29% CAGR: 29% 913 945 1,037 1,066 687 117 764 522 92 572 412 73 444 344 59 322 391 275 38 48 253 198 25 32 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Jun-17 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Jun-17 FY11 FY
Slide 24: Balance Sheet Assets
Balance Sheet Assets 3% 17% Loan Book: 80% Cash & Liquid Investments*: 17% Other Assets: 3% 80% Total Assets As at June 30, 2017 ₹ 1.07 Tn (US$ 16.40 Bn) As at June 30, 2016 ₹ 820.7 Bn (US$ 12.63 Bn) *Cash, Cash Equivalents and Investments in Liquid Debt Instruments US $ amounts are converted based
Slide 25: Asset Composition
Asset Composition Q1FY 16-17 Q1FY 17-18 23% 22% 77% 78% Mortgage Loans Corporate Mortgage Loans • Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of ₹ 2.4 Mn; average LTV of 73% (at origination) 25
Slide 26: Asset Quality
Asset Quality As at June 30, 2017 [excluding counter-cyclical provisioning] 0.85% 0.84% (in ₹ Bn) 0.80% NPA (90+ dpd*): 7.57 Provisions for 0.49% 0.48% 0.49% Contingencies: 10.98 0.36% 0.36% Of which 0.31% NPAs: 4.64 Other provisioning: 6.34 Regulatory Provisioning: 7.39 Jun 15 Jun 16 Jun 17 Excess
Slide 27: Retail Mortgage Loans' Sourcing
Retail Mortgage Loans' Sourcing 20% 5% 10% 65% Direct Sales Team External Channels Branch Walk-ins eHome Loans • 22% of home loans’ sourcing is now through eHome Loans. Including LAP, 20% of all retail mortgage loans’ sourcing is now through eHome Loans • 90% of incremental sourcing is done in-house
Slide 28: Home Loan Profile: Focus on Mid-Income Affordable Housing
Home Loan Profile: Focus on Mid-Income Affordable Housing Average Loan Size ₹ 2.4 Mn Maximum Loan to Value 80% Average Loan to Value 73% (at origination) Average Loan Term 15 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing • PMAY extended to Middle Income Group
Slide 29: Smart City Home Loan: Cost-effective Geographical Expansion
Smart City Home Loan: Cost-effective Geographical Expansion into Profitable Home Loan Segments Minimum Loan Size ₹ 1.0 Mn Average Loan Size ₹ 1.5 Mn Maximum Loan Size ₹ 4.0 Mn Maximum Loan to Value 80% (at origination) Maximum Loan Term 20 years Primary Security Mortgage of property financed Repayme
Slide 30: Conservative Loan Against Property Profile
Conservative Loan Against Property Profile Average Loan Size ₹ 7.3 Mn Maximum Loan to Value 65% Average Loan to Value 49% (at origination) Average Loan Term 7 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing Basis of Credit Appraisal Business cash flow analysis
Slide 31: LAP Grading
LAP Grading A Pioneering Initiative for Improved Risk Management and Greater Transparency 31
Slide 32: Loan Against Property Grading from CRISIL and ICRA
Loan Against Property Grading from CRISIL and ICRA • LAP grading engagement with CRISIL (a Standard and Poor’s Company) and ICRA (a Moody’s Investors Service Company) - CRISIL grades LAP loans on aspects such as past payment track record; nature of business and financial performance; nature of prope
Slide 33: CRISIL LAP Grading Methodology
CRISIL LAP Grading Methodology Detailed assessment of key factors determining quality of LAP loans Financial Strength Business Management • Interest and debt service cover • Business sector and sectoral prospects • Revenues, margin and profitability • Business duration and track record • Networth an
Slide 34: CRISIL LAP Grading
9th Report updated as of Jul 21, 2017 CRISIL LAP Grading Grading Segment Characteristics Total Interest Disbursals Outstanding Grading Quality of Service Loan to EBITDA Apr 15 – Liabilities/ Scale LAP Loans# Coverage Value (LTV) Margins June 17 Total Ratio (ISCR) Networth Over 99% of LAP1 Highest 9.
Slide 35: ICRA LAP Grading Methodology
ICRA LAP Grading Methodology (2nd rating agency to grade LAP loans) • Two years ago H1FY16, IBHFL tied up with rating agency ICRA to grade its incremental LAP loans • ICRA LAP Grading reflects ICRA’s assessment of the credit quality of the loan on a ICRA developed customised scale Grading Assessment
Slide 36: ICRA LAP Grading
7th Report updated as of Jul 19, 2017 ICRA LAP Grading Grading Characteristics Level of credit Grading Grading Scale Median LTV Median FOIR worthiness Distribution Over 99% of LAP1 Excellent 14.0% 26% 22% incremental LAP loans LAP2 Good 66.7% 52% 47% are within the top LAP3 Average 19.1% 65% 60% thr
Slide 37: Liabilities Profile
Indiabulls HOUSING FINANCE Liabilities Profile
Slide 38: Liabilities
Liabilities 11% 6% 83% Share Holders' Funds Borrowings Other Liabilities Total Liabilities As at June 30, 2017 ₹ 1.07 Tn (US$ 16.40 Bn) As at June 30, 2016 ₹ 820.7 Bn (US$ 12.63 Bn) US $ amounts are converted based on the exchange rate of US $1 = ₹ 65 38
Slide 39: Funding Mix
Funding Mix 2% 2% 3% 11% 11% 10% 35% 49% 47% ECB Sell Down Bank Loans 52% 38% 40% Debentures and Securities Jun 15 Jun 16 Jun 17 Total Borrowings As at June 30, 2017 ₹ 884.7 Bn (US$ 13.61 Bn) As at June 30, 2016 ₹ 662.3 Bn (US$ 10.19 Bn) US $ amounts are converted based on the exchange rate of US $1
Slide 40: Strengthening Liability Profile
Strengthening Liability Profile 900 Borrowings (₹ Bn) 885 662 800 700 600 509 Borrowings 500 400 Net Gearing 300 6.3 5.9 200 4.6 Net Gearing: Borrowings Net of ‘Cash & 100 Cash Equivalents’ and ‘Investments in Liquid Debt Instruments’ - June 15 June 16 June 17 Total Funding (₹ Bn) Net Incremental Co
Slide 41: Spread Enhancement from Increasing Funding Efficiencies
Spread Enhancement from Increasing Funding Efficiencies Loan Assets (₹ Bn) Cost of Funds Expanding Spreads Loan Assets 6-Yr CAGR: 29% Own Book 6-Yr CAGR: 27% 945 8.80% 93 12.89% 8.39% 12.43% 710 8.25% 11.49% 8.06% 540 82 7.83% 3.28% 3.18% 3.24% 61 7.51% 852 628 9.61% 9.25% 479 8.25% Jun 15 Jun 16 Ju
Slide 42: Optimally Matched Balance Sheet
Optimally Matched Balance Sheet Maturity Profile (As of March 31, 2017) 486 473 320* 316 276 293 Up to 1 yr 1 - 5 yrs Over 5 yrs Assets Liabilities (Amounts in ₹ Bn) • *Assets in the ‘Up to 1 Yr’ bucket includes ₹ 185.02 Bn (as of March 31, 2017) of Cash, Cash equivalents and investments in liquid d
Slide 43: e-Home Loans
Indiabulls HOUSING FINANCE ast e-Home Loans
Slide 44: Technology Leveraged Cost-Effective Growth
Technology Leveraged Cost-Effective Growth Improving Efficiency and Throughput • Within 12 months of launch: ‒ 22% of incremental home loans are end-to-end disbursed through the ‘e-Home Loans’ platform ‒ 34% of the remainder loans are using the ‘eHome Loans’ platform for one or more of its features
Slide 45: India's First Online Home Loans
: India’s First Online Home Loans Application & Credit Appraisal & Disbursal Document Completion Sanction Online form filled at customer convenience Focus on appraisal. No manual data entry No requirement to visit the branch - Fields from application form Click-of-button call centre support Loan agr
Slide 46: Enhancing Customer Experience and Convenience
: Enhancing Customer Experience and Convenience OneGO e-Sign Unified Payment Interface Facebook Integration Single e-signature for multiple uploaded Money transfer as easy as sending a text Lead generation through Facebook documents message Application form filling through Facebook Chatbot Replaces
Slide 47: Eminent and Experienced Board of Directors
Eminent and Experienced Board of Directors Board of Directors with pre-eminence and experience in diverse fields • Mr. Sameer Gehlaut : Executive Chairman • Mr. Gagan Banga : Vice Chairman and Managing Director • Dr. K.C. Chakrabarty : Former Deputy Governor, The Reserve Bank of India • Justice Gyan
Slide 48: Corporate Social Responsibility
Corporate Social Responsibility 48
Slide 49: Indiabulls Foundation: Corporate Social Responsibility
Indiabulls Foundation: Corporate Social Responsibility Best Overall Excellence in CSR award at National Awards for Excellence in CSR & Sustainability 2016 Health Jan Swastha Kalyan Vahika Scholarship: Education (charitable medical vans): - To over 600 meritorious students - Free check-up - Added 3 v
Slide 50: Distribution Network, Ratings, Key Ratios, Valuations and Shareholding
Distribution Network, Ratings, Key Ratios, Valuations and Shareholding 50
Slide 51: Country Wide Reach
Country Wide Reach Head office Master • Core credit Service committee Branches Centers (MSC) • Loans above pre- • • Walk-in branches • Regional credit hub defined limits go to • • Customer the committee Service • Detailed credit analysis • interaction and • • Centers service delivery • Underwrites h
Slide 52: Credit Ratings
Credit Ratings Long Term Short Term Rating Rating ICRA(A Moody’s Investor Service Company) AAA A1+ CARE Ratings AAA A1+ Brickwork Ratings AAA AA+ CRISIL (a Standard & Poor’s Company) [Outlook: Positive] A1+ Outlook revised upwards from ‘Stable’ India Ratings & Research A1+ (a Fitch Group Company) •
Slide 53: Rising Productivity Ratios
Rising Productivity Ratios FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 No. of Employees 4,512 4,243 4,072 4,099 4,840 5,453 6,388 Profit per employee 1.7 2.4 3.1 3.8 3.9 4.3 4.6 (₹ Mn) Asset per employee 37.1 58.5 80.9 108.4 118.2 140.2 162.3 (₹ Mn) Cost-to-Income Ratio 21.0% 18.7% 18.0%
Slide 54: Key Financial Metrics
Key Financial Metrics FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Pre Tax RoAA (%) 5.5% 4.9% 4.9% 4.8% 4.9% 4.9% 4.6% Post Tax RoAA (%) 4.1% 3.7% 3.8% 3.8% 3.7% 3.7% 3.6% RoE (%)^ 17.2% 22% 26% 27% 29% 26% 26% Capital Adequacy 23.87% 19.96% 18.58% 20.47% 19.60% 23.38% 20.91% (%)# - Tier
Slide 55: Valuations and Returns
Valuations and Returns Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Jun-17 Market Price per Share (₹) 155 207 272 286 558 674 998 1,234* Market Capitalisation 48.1 64.5 84.9 95.4 198.4 284.0 422.9 523.8 (₹ Bn) PE Ratio (times) 6.5 6.5 6.8 6.0 10.2 11.3 14.5 16.6 Dividend per Share (₹) # 10 13 20
Slide 56: Shareholding Pattern
Shareholding Pattern 8.6% 6.0% 23.6% 61.8% Founder Foreign Institutional Shareholding MFs/Banks/IFI Public • Domestic institutional shareholding has more than doubled to 6% from 2.7% a year ago MF: Mutual Funds; IFI: Indian Financial Institutions As on 30th June, 2017 56
Slide 57: Detailed Financials
Indiabulls HOUSING FINANCE Detailed Financials 57
Slide 58: Consolidated Balance Sheet
Consolidated Balance Sheet ₹ 184.88 Bn of Cash & Cash Equivalents and Investments in Liquid Debt Instruments The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 184.88 Bn as at 30th Jun, 2017. The company receives income from its cash, cash equivalents and investme
Slide 59: Consolidated Income Statement
Consolidated Income Statement The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 184.88 Bn as at 30th Jun, 2017. The company receives income from its cash, cash equivalents and investments in liquid debt instruments through the quarter, most of which appears in ‘O
Slide 60: Thank you
Indiabulls HOUSING FINANCE Thank you
Indiabulls Housing Finance — Investor Presentation (October 2017) on 6ix