Sammaan Capital Ltd · NSE:SAMMAANCAP
Sammaan Capital — Indiabulls Housing Finance — Q2 FY2016-17 Earnings Presentation
58 slides from Sammaan Capital's earnings presentation, Oct 21, 2016
Slide 1: Unaudited Financial Results – Q2 FY 2016-17
Indiabulls Housing Finance Limited Unaudited Financial Results – Q2 FY 2016-17 October 21, 2016
Slide 2: Safe Harbour Statement
Safe Harbour Statement This document contains certain forward-looking statements based on current expectations of Indiabulls Housing Finance Ltd. (CIN: L65922DL2005PLC136029) management. Actual results may vary significantly from the forward-looking statements in this document due to various risks a
Slide 3: Contents
Contents Pg. No. 1. Business Update 04 2. Operational Update 13 3. Indian Mortgage Market 18 4. Financial and Operational Highlights 27 5. LAP Grading 36 6. Liabilities Profile 42 7. Corporate Social Responsibility 48 8. Key Ratios, Valuations and Shareholding 50 9. Detailed Financials 55 3
Slide 4: Business Update
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Business Update
Slide 5: Our Journey
Our Journey 2016-17 Balance sheet: ₹ 913.3 Bn. Net Worth: ₹115 Bn ₹ 70 Bn raised through public 369.2* issue of bonds 2015-16 ₹ 13.3 Bn raised through issue of ‘Masala’ bonds 283.9 2014-15 Balance Sheet: ₹ 764.4 Bn, PAT: ₹ 23.4 Bn ₹ 40 Bn raised through QIP issue 198.4 Net worth of ₹ 1
Slide 6: Business Update
Business Update Key Financial Highlights : H1 FY 16-17 (ending September 30, 2016) Y-o-Y H1 FY 16-17 H1 FY 15-16 Growth (%) Total Revenues (₹ Bn) 54.72 42.71 28.1% NII (₹ Bn) 21.46 17.06 25.8% PBT (₹ Bn) 17.96 14.34 25.3% PAT (₹ Bn) 13.14 10.67 23.2% Year-on-Year (Y-o-Y) Comparison : Q2 FY16-17 vs Q
Slide 7: Growth Driver: Core Home Loans Business
Growth Driver: Core Home Loans Business Increased Focus on Affordable Housing • Launching Smart City Home Loans ₋ Expanding reach into emerging smart cities ₋ Technology led, low-cost, lean distribution ₋ Average ticket size of ₹ 15 Lacs • Increasing Home Loans penetration ₋ Target ticket size range
Slide 8: Growth Driver: Core Home Loans Business – Changing Liability Profile
Growth Driver: Core Home Loans Business Enabler: Changing Liability Profile Driving Fall in Cost of Funds Bonds raised in H1 FY17 > Bonds Raised in FY15+FY16 Bonds Issued (₹ Bn) • Diversified and sustainable bond franchise: first time issues open up a large and hitherto untapped investor class 98 19
Slide 9: Growth Driver: Core Home Loans Business – Technology Leveraged Growth
Growth Driver: Core Home Loans Business Enabler: Technology Leveraged Cost-Effective Growth Reduction in Processing Cost per File • Technology-enabled lean distribution, reduction in cost-to-income • Within 3 months of launch, 11% of incremental home loans sourced through ‘e-Home Loans’ • Manpower a
Slide 10: Growth Driver: Core Home Loans Business – Sell Down
Growth Driver: Core Home Loans Business Enabler: Sell Down of Home Loans without Capital Consumption Capital Conservation Loan Product Risk Weight • At 35%, home loans have the lowest risk weight - Capital consumption at slower pace than book growth Home Loans 35% • Strengthened securitization progr
Slide 11: Regulatory Impetus in the Last 90 days
Regulatory Impetus in the Last 90 days Government focus and mission of ‘Housing For All’ has prompted all financial regulators to increase flow of funds to housing finance companies • RBI has reduced risk weights on bank lending to AAA rated housing finance companies to 20% from 100% • SEBI has incr
Slide 12: First Time Issuances: Masala Bonds and Public Issue of Bonds
First Time Issuances : Masala Bonds and Public Issue of Bonds Masala Bonds • US$ 200 Mn (₹ 13.3 Bn) of rupee-denominated, Singapore listed issue • Marquee global investors: AllianceBernstein, BlackRock, Jupiter, BlueBay, BFAM Partners • Taps into a new and vast international investor class, leading
Slide 13: Operational Update
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Operational Update 13
Slide 14: Business Summary
Business Summary • Loans Outstanding : ₹ 753.13 Bn (September 30, 2016) : (US$ 11.24 Bn) • Loan Assets CAGR (5 years) : 26 % • Cumulative Loans given to retail Customers : 8,66,785 • Cumulative Loans Disbursed till date : ₹ 1,447.2 Bn (US$ 21.60 Bn) • Cost to Income Ratio (H1 FY 17) : 14.1% • Profit
Slide 15: Growth Track Record
Growth Track Record Balance Sheet Loan Assets Revenue CAGR: 26% CAGR: 27% CAGR: 30% 913 753 687 92 764 522 73 572 412 59 444 344 48 55 391 275 38 322 253 198 25 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Sep-16 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Sep-16 FY11 FY12 FY13 FY14 FY15 FY16 H1 FY17 NII
Slide 16: Credit Ratings
Credit Ratings Long Term Short Term Rating Rating CARE Ratings AAA A1+ Brickwork Ratings AAA CRISIL (a Standard & Poor’s Company) AA+ A1+ ICRA (an Associate of Moody’s Investor Service) AA+ A1+ India Ratings & Research (a Fitch Group A1+ Company) In Q1 FY17 IBHFL’s subordinate debt credit rating was
Slide 17: Country Wide Reach
Country Wide Reach Head office • Core credit committee Master Service • Loans above pre- Centers (MSC) defined limits go to • Regional credit hub the committee Branches • Detailed credit • Walk-in analysis branches • Underwrites high • Customer Service interaction and value cases Centers service del
Slide 18: Indian Mortgage Market
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Indian Mortgage Market 18
Slide 19: Growth Momentum: Trends in Residential Real Estate
Growth Momentum: Trends in Residential Real Estate • Boost in supply of affordable, mid-ranged housing units: ₋ Twice1 as many launches of affordable housing projects during H1 CY 2016 as compared to the same period last year ₋ Across the country, projects involving 728,840 affordable housing units
Slide 20: Growth Momentum: Trends in Commercial Real Estate
Growth Momentum: Trends in Commercial Real Estate • Office space demand in the first half of CY 2016 grew by 12%1 y-o-y across top 6 Indian cities • Increase in office space pre-commitments (reservation of property before it is ready) – Retail and technology sectors among forerunners – Pune recorded
Slide 21: Accelerators of Housing
Accelerators of Housing First 3 Months of CY2016: Boost to the Housing Sector Real Estate (Regulatory & Development) Act, 2016 will lead to a structured, transparent and Regulator disciplined sector Increased tax incentive reduces effective home loan yields to 4.0% for a 9.4% home loan for first-tim
Slide 22: 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 2030, and growing trend of nuclear families 88% 81% 41% 26% 29% 17% 20% 09% India Tha
Slide 23: Tax Incentive for Affordable Housing
Tax Incentive for Affordable Housing Particular 2016 2010 2000 Loan amount 2,400,000 2,400,000 2,400,000 Nominal interest rate(%) 9.40% 9.25% 13.25% Deduction allowed on interest repayment* 250,000 150,000 75,000 Deduction allowed on principal repayment# 150,000 100,000 20,000 Tax rate applicable 34
Slide 24: Buying a House: Prudent Financial Investment
Buying a House: Prudent Financial Investment Rental Yield v/s Home Loan Cost 3.7% 3.8% 3.9% 3.9% 4.0% 3.0% 3.1% 2.5% 2.2% 2.1% Ahmedabad Bengaluru Chennai Delhi Hyderabad Kolkata Mumbai Pune India Rental yield Effective Interest Rate on Home Loans (4.0%) Source: NHB; Industry reports Increasing Affo
Slide 25: Mortgage Market Growth
Mortgage Market Growth Growing HFC Market Share in a Steadily Expanding Home Loans Market 17% 18% 18% CAGR HFC CAGR: 22% 10,299 8,887 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 Banks' Share HFCs' Share (Amounts in ₹ Bn) • Home loan market is concentrate
Slide 26: No Regulatory Arbitrage: Regulatory Regime for Housing Finance Co's at par with Banks
No Regulatory Arbitrage: Regulatory Regime for Housing Finance Co’s at par with Banks Parameters HFCs Banks NBFCs NPA Recognition 90 dpd 90 dpd 120 dpd CRAR 12% 9% 15% - Tier 1 6% 6% 7.5% Standard Asset Housing Loans 0.4% 0.4% 0.25% Provisions Others 1% 0.25-1% 0.25% SARFAESI Coverage Yes Yes Yes •
Slide 27: Financial and Operational Highlights
Financial and Operational Highlights 27
Slide 28: Balance Sheet Assets
Balance Sheet Assets 5% 22% Loan Book: 73% Cash & Liquid Investments*: 22% Other Assets: 5% 73% Total Assets As at September 30, 2016 ₹ 913.3 Bn (US$ 13.63 Bn) As at September 30 , 2015 ₹ 668.0 Bn (US$ 9.97 Bn) *Cash, Cash Equivalents and Investments in Liquid Debt Instruments 28 US $ amounts are co
Slide 29: Asset Composition
Asset Composition Q2FY 15-16 Q2FY 16-17 1% 23% 22% 76% 78% Mortgage Loans Corporate Mortgage Loans Commercial Vehicle Loans • Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of ₹ 2.5 Mn; average LTV of 71% (at origination) 29
Slide 30: RoE Maximization through Capital Conservation
RoE Maximization through Capital Conservation Loan Assets (₹ Bn) Loans Sold (₹ Bn) Stable Spreads Loan Assets 5-Yr CAGR: 26% (in preceding 12 months) Own Book 5-Yr CAGR: 24% 47 753 42 88 40 12.52% 12.43% 12.25% 582 450 69 3.18% 3.18% 3.20% 52 665 513 9.34% 9.25% 9.05% 398 Sep 14 Sep 15 Sep 16 Sep 14
Slide 31: Asset Quality
Asset Quality As at September 30, 2016 0.85% 0.84% 0.83% (in ₹ Bn) NPA (90+ dpd): 6.24 Provisions for 0.51% 0.49% Contingencies: 9.54 0.49% Of which 0.34% 0.35% 0.34% NPAs: 3.70 Other provisioning: 5.84 Regulatory Provisioning: 6.18 Sep 14 Sep 15 Sep 16 Excess Provisioning Gross NPA General & Specif
Slide 32: Retail Mortgage Loans' Sourcing
Retail Mortgage Loans' Sourcing 84% of Mortgage loans are sourced in-house 10% 16% 74% Direct Sales Team* External Channels Branch Walk-ins • Nearly 85% of the incremental sourcing is done in-house by on-rolls employees *Direct Sales Team: on-rolls sales employees 32
Slide 33: New Initiative: Smart City Home Loan
New Initiative: Smart City Home Loan 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 Repayment Type Monthly amortizing • RBI defines affordable housin
Slide 34: Home Loan Profile: Focus on Affordable Housing
Home Loan Profile: Focus on Affordable Housing Average Loan Size ₹ 2.5 Mn Maximum Loan to Value 80% Average Loan to Value 71% (at origination) Average Loan Term 15 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing • RBI defines affordable housing finance as housi
Slide 35: 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 36: LAP Grading
LAP Grading A Pioneering Initiative for Improved Risk Management and Greater Transparency 36
Slide 37: 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 the loans on aspects such as past payment track record; nature of business and financial performance; nature of prope
Slide 38: 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 39: CRISIL LAP Grading: Updated for Q2 FY17
6th Report CRISIL LAP Grading: Updated for Q2 FY17 Grading Segment Characteristics Total Interest Disbursals Outstanding Grading Quality of Service Loan to EBITDA Apr 15 – Liabilities/ Scale LAP Loans# Coverage Value (LTV) Margins Sep 16 Total Ratio (ISCR) Networth 99% of incremental LAP1 Highest 8.
Slide 40: ICRA LAP Grading Methodology
ICRA LAP Grading Methodology (2nd rating agency to grade LAP loans) • In Q2 FY 2015-16, 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 Par
Slide 41: ICRA LAP Grading: Updated for Q2 FY17
4th Report ICRA LAP Grading: Updated for Q2 FY17 Grading Characteristics Level of credit Grading Grading Scale Median LTV Median FOIR worthiness Distribution Over 99% of LAP1 Excellent 14.8% 25% 33% incremental LAP loans LAP2 Good 67.3% 49% 48% are within the top LAP3 Average 17.7% 62% 59% three gra
Slide 42: Liabilities Profile
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Liabilities Profile 42
Slide 43: Liabilities
Liabilities 13% 6% Share Holders’ Funds: ₹ 114.7 Bn (US$ 1.71 Bn) Borrowings: ₹ 743.9 Bn (US$ 11.1 Bn) Other Liabilities: ₹ 54.7 Bn (US$ 0.82 Bn) 81% Total Liabilities: As of September 30, 2016: ₹ 913.3 Bn (US$ 13.63 Bn) As of September 30, 2015: ₹ 668.0 Bn (US$ 9.97 Bn) US $ amounts are converted b
Slide 44: Funding Mix
Funding Mix 0% 2% 2% 11% 11% 12% 39% 54% 47% ECB Sell Down Bank Loans 49% 35% 39% Debentures and Securities Sep 14 Sep 15 Sep 16 Total Borrowings: As of September 30, 2016: ₹ 743.9 Bn (US$ 11.10 Bn) As of September 30, 2015: ₹ 527.61 Bn (US$ 7.87 Bn) • For the first time, bank borrowings are less th
Slide 45: Strengthening Liability Profile
Strengthening Liability Profile 800 Borrowings (₹ Bn) 744 700 600 528 500 411 Borrowings Net Gearing 400 5.7 4.8 300 200 3.9 100 Net Gearing: Borrowings Net of ‘Cash & Cash Equivalents’ and ‘Investments in Liquid - Sep 14 Sep 15 Sep 16 Debt Instruments’ Total Funding (₹ Bn) Net Incremental Contribut
Slide 46: Optimally Matched Balance Sheet
Optimally Matched Balance Sheet Maturity Profile (As of March 31, 2016) 353 333 273* 270 175 153 Up to 1 yr 1 - 5 yrs Over 5 yrs Assets Liabilities (Amounts in ₹ Bn) • * Assets in the ‘Up to 1 Yr’ bucket includes ₹ 128.7 Bn (as of March 31, 2016) of Cash, Cash equivalents and investments in liquid d
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 Health Jan Swastha Kalyan Vahika Rainwater harvesting: Disaster Relief (mobile medical vans): - At schools during the Latur drought - Free check-up - Benefitted over 350 students - 13 mobile medical vans - More than 4,50,000 patients Nutritional
Slide 50: Key Ratios, Valuations and Shareholding
Key Ratios, Valuations and Shareholding 50
Slide 51: Rising Productivity Ratios
Rising Productivity Ratios FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 No. of Employees 5,453 4,840 4,099 4,072 4,243 Profit per employee (₹ Mn) 4.3 3.9 3.8 3.1 2.4 Asset per employee (₹ Mn) 140.2 118.2 108.4 80.9 58.5 Cost-to-Income Ratio 14.3% 16.4% 17.1% 18.0% 18.7% 51
Slide 52: Key Financial Metrics
Key Financial Metrics FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 Pre Tax RoAA (%) 4.9% 4.9% 4.8% 4.9% 4.9% Post Tax RoAA (%) 3.7% 3.7% 3.8% 3.8% 3.7% RoE (%)^ 26% 29% 27% 26% 22% Capital Adequacy (%)# 23.38% 19.60% 20.47% 18.58% 19.96% - Tier I# 20.36% 16.28% 16.10% 15.05% 19.27% - Tier II# 3.02% 3.32%
Slide 53: Valuations and Returns
Valuations and Returns Sep -16 Mar-16 Mar-15 Mar-14 Mar-13 Mar-12 Market Price per Share (₹) 875* 674.0 557.9 285.6 271.8 207.1 Market Capitalisation 369.2 284.0 198.4 95.4 84.9 64.5 (₹ Bn) PE Ratio (times) 14.2 11.3 10.2 6.0 6.8 6.5 Dividend per Share (₹) # 18 36 35 29 20 13 Dividend Yield 4.1% 5.3
Slide 54: Shareholding Pattern
Shareholding Pattern 11.0% 2.6% 24.2% 62.3% Founder Foreign Institutional Shareholding MFs/Banks/IFI Public As on 30th September, 2016 MF: Mutual Funds; IFI: Indian Financial Institutions 54
Slide 55: Detailed Financials
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Detailed Financials 55
Slide 56: Consolidated Balance Sheet
Consolidated Balance Sheet ₹ 205.92 Bn of Cash & Cash Equivalents and Investments in Liquid Debt Instruments The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 205.92 Bn as at 30th Sept, 2016. The company receives income from its cash, cash equivalents and investm
Slide 57: Consolidated Income Statement
Consolidated Income Statement The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 205.92 Bn as at 30th Sept, 2016. The company receives income from its cash, cash equivalents and investments in liquid debt instruments through the quarter, most of which appears in ‘
Slide 58: Thank you
Indiabulls HOME LOANS ~_Ab Ghar Aa Jao 7) Thank you
Indiabulls Housing Finance — Q2 FY2016-17 Earnings Presentation on 6ix