Aavas Financiers Ltd. · NSE:AAVAS
Aavas Financiers — 9M FY19 Earnings Presentation
41 slides from Aavas Financiers's earnings presentation, Jan 30, 2019
Slide 1: Cover letter to stock exchanges
Agvqs FINANCIERS LTD Ref. No. AAVAS/SEC/2018-19/309 SA PN E AAPKE, SA ATH H A M A A R A Date: January 30, 2019 To, To, The National Stock Exchange of India Limited BSE Limited The Listing Department Dept, of Corporate Services Exchange Plaza, Phiroze Jeejeebhoy Towers, Bandra Kurla Complex, Dalai St
Slide 2: Investor Presentation – 9M FY19
AAVAS FINANCIERS LIMITED Investor Presentation – 9M FY19 January 2019
Slide 3: Safe Harbor
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by Aavas Financiers Ltd. (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securit
Slide 4: Our Background
Our Background Commenced operations in 2011 Regulated by National Housing Bank from Jaipur, Rajasthan (“NHB”) Initially promoted by Recognized by NHB for refinance Au Small Finance Bank (till 2016) facility Currently being run by professional management team backed by marquee Retail network of 210 b
Slide 5: Our Pillars of Strength
Our Pillars of Strength Experienced Board of Directors Professional Management Team Fully in-house Sourcing Model Positive ALM & Strong Liquidity Technology and Data Analytics Diversified Shareholding base
Slide 6: Experienced Board of Directors
Experienced Board of Directors Krishan Kant Rathi Sandeep Tandon K. R. Kamath Chairman & Independent Director Independent Director Non-executive Nominee Director Qualifications: Chartered Accountant, Company Qualifications: Bachelor’s degree in Secretary Qualifications: Bachelor’s in Electrical comm
Slide 7: Professional Management Team
Professional Management Team • 17+ years of experience in Retail finance Sushil Kumar Agarwal • Former Business Head (SME and Mortgages), Au SFB Whole Time Director & CEO • Prior associated with Kotak Mahindra Prime, ICICI Bank, Au Small Finance Bank Ghanshyam Rawat - Co-Founder and CFO Avinash Kuma
Slide 8: Superior Business Outcome
Fully in-house Sourcing Model 1. Reduction in average TAT (days) In House execution model – Replicated across 10 States Turn around time is a key metric for employee incentives Lead generation and 21 Superior Business Outcome Risk management Collections sourcing 13 ▪ Focused direct sourcing ▪ In-hou
Slide 9: Improving Credit Ratings
Improving Credit Ratings Long-Term Credit Rating Short-Term Credit Rating Reaffirmed ICRA CARE CRISIL ICRA A+ / A+ / A+ / Dec-18 Dec-18 Dec-18 Dec-18 A1+ Positive Positive Stable Mar-18 A1+ CARE Dec-18 A1+ A/ A+ / BBB+ / Mar-16 Mar-17 Aug-12 Stable Stable Stable Mar-18 A1+ 8
Slide 10: Technology and Data Analytics
Technology and Data Analytics Lead Generation Underwriting Operations Collections ▪ Majority of the leads ▪ Platform integration ▪ Tie-up with banks to ▪ Route optimization are logged in through with credit bureaus enable branch-level for collection the sourcing app ▪ Quarterly scrub of registration
Slide 11: Initial Public Offering
Initial Public Offering October 2018 ▪ Listing of Aavas Financiers Limited on BSE and NSE ▪ Listing Date : 8th October 2018 ▪ Total IPO size ₹ 16,403 Mn of which Primary is ₹ 3,600 Mn ▪ Raised ₹ 5,202 Mn from 34 high profile anchor investors 10
Slide 12: Diversified Shareholding Base
Diversified Shareholding Base Shareholding Pattern as on Top Public Shareholders : 31st December 2018 31st December 2018 Investor Details % Holding Others, 2% SBI Equity Mutual Fund^ 7.55 AU Small Finance Bank 7.23 ^ FII, 12% Nomura Asset Management 2.38 Kedaara Capital, DSP Mutual Fund^ 2.09 34% DI
Slide 13: Award and Certifications
Award and Certifications ASSOCHAM Award ISO Certifications Certified with ISO 10002:2014 compliance standard in respect of customer satisfaction and complaint handling process pursuant to a certificate of registration (CCH 04 00002) dated June 13, 2018 and valid until June 12, 2021 Certified with IS
Slide 14: Housing Sector – Under-penetrated
Housing Sector – Under-penetrated Size of Opportunity Measures from Government and Regulator Long-term Government Support
Slide 15: Size of Opportunity
Size of Opportunity Indian Housing Finance Housing Market (₹ Trn) Market Size ₹ 16.7 Trn +19% 34 CAGR (as on Mar-18) 29 24 20 5 year CAGR +18% 14 17 (FY13 - FY18) 12 9 10 6 6 7 Market Share Banks - 61% HFC’s & NBFC’s - 39% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (as on Mar-18) (P
Slide 16: Measures from Government and Regulator
Measures from Government and Regulator Increase in NHB Refinance Limit NHB has increased refinance limits for Banks/HFC’s from Rs. 2,40,000 Mn to Rs. 3,00,000 Mn for this year RBI increases single borrower exposure limit RBI has increased single borrower exposure limit for Banks to NBFC’s from 10% t
Slide 17: Long-term Government Support
Long-term Government Support Demand Side Supply Side Interest Subsidy Scheme (CLSS – Credit Linked Subsidy Scheme) Income Tax Expenses ▪ Promotion of affordable housing for weaker section ▪ 100% tax deduction on affordable housing projects for developers to ▪ Interest rate subsidy scheme under Pradh
Slide 18: Financial Performance
Financial Performance Key Business Parameters AUM and Disbursements Spreads and Margins Asset Quality Liability Franchise ALM - Surplus Key Ratios
Slide 19: Key Business Parameters
Key Business Parameters 83,378 units ₹ 69,976 Mn 122 districts ~50.97% Cumulative Housing Units Loan to Value Cumulative Disbursements Presence in 10 States Financed on portfolio 2,834 units ₹ 2,786 Mn 876 tehsils 71 branches Cumulative Housing Units Cumulative Disbursements Coverage in 10 States fo
Slide 20: Performance Highlights
Performance Highlights AUM (₹ Mn) Disbursement (₹ Mn) GNPA (%) +48.9% +37.5% -24 bps 52,834 17,994 0.82% Average Loan 35,477 13,090 0.58% Outstanding per unit ₹ 0.85 Mn Dec-17 Dec-18 9MFY18 9MFY19 Dec-17 Dec-18 PAT* (₹ Mn) NIM (%) ROA (%) +53 bps Maintained Average Loan +66.5% above 3% per unit Disb
Slide 21: Healthy Business Growth
Healthy Business Growth AUM (₹ Mn) Disbursements (₹ Mn) PAT (₹ Mn) 40,730 20,512 929 +78% +65% CAGR CAGR +96% 26,935 13,916 CAGR 571 10,504 16,799 328 5,369 8,429 191 4,062 2,799 63 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 +60% +47% 52,834 CAGR 17,994 1,03
Slide 22: AUM – Category wise Break-up
AUM – Category wise Break-up Product Category (₹ Mn) Customer Category (₹ Mn) Segmental Breakup (₹ Mn) +48.9% Home Loan ATS +48.9% +48.9% 52,834 52,834 52,834 Dec 18 : 0.88 Mn Salaried ATS Retail ATS 18,727 35,477 35,477 35,477 39,703 Dec 17 : 0.88 Mn Dec 18 : 0.85 Mn Dec 18 : 0.85 Mn 11,299 52,510
Slide 23: Disbursement – Category wise Break-up
Disbursement – Category wise Break-up Product Category (₹ Mn) Product Category (₹ Mn) Home Loan ATS +37.5% Dec 18 : 0.96 Mn 17,994 Dec 17 : 0.95 Mn 13,090 12,570 72.3% 69.9% Mortgage Loan ATS 9,458 Dec 18 : 0.75 Mn Dec 17 : 1.00 Mn 5,423 27.7% 30.1% 3,632 9MFY18 9MFY19 9MFY18 9MFY19 Home Loan Mortga
Slide 24: Consistent Spreads
Consistent Spreads Yields, Cost of Borrowings (%) and Spreads Yields (%) COB (%) Spreads (%) Yields (%) COB (%) Spreads (%) 18.10% 14.63% 14.39% 14.23% 13.99% 13.90% 13.88% 13.94% 16.50% 15.12% 14.72% 13.99% 13.94% 12.30% 11.40% 9.23% 10.48% 8.96% 8.75% 8.82% 8.63% 8.57% 8.63% 9.50% 8.63% 8.82% Cons
Slide 25: Margin and Cost Efficiency
Margin and Cost Efficiency OpEx (%) NIM (%) ROA (%) 3.50% 3.45% 3.23% 8.13% 8.01% 8.23% 2.69% 2.63% 2.75% 2.85% 6.96% 2.28% Jun-16 Sep-16 Dec-16 Mar-17 Jun-16 Sep-16 Dec-16 Mar-17 Jun-16 Sep-16 Dec-16 Mar-17 3.83% 3.98% 3.90% 3.95% 8.84% 8.83% 8.76% 8.56% 2.89% 3.01% 3.03% 2.97% Jun-17 Sep-17 Dec-17
Slide 26: Asset Quality
Asset Quality Gross NPAs (%) Net NPAs (%) -24 bps -21 bps 0.79% 0.82% 0.70% 0.60% 0.55% 0.58% 0.49% 0.52% 0.43% 0.42% 0.34% 0.26% 0.22% 0.19% Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Dec-17 Dec-18 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Dec-17 Dec-18 1+DPD (%) Segment-wise GNPAs Dec-17 Dec-18 8.5% 8.9% 7.3% 0.
Slide 27: Robust Liability Franchise – no exposure to Commercial Paper
Robust Liability Franchise – no exposure to Commercial Paper Diversified Funding Mix Diversified Mix Loan Assets & Borrowings (₹ Mn) As on Dec-18 As on Dec-18 35 Terms Loans Lenders Floating Fixed Equity 13% 1% Assignment 10% 11+ years 52,834 52,834 49% NHB Refinancing Average Borrowing Tenor NCDs 2
Slide 28: ALM - Comfortable Surplus
ALM - Comfortable Surplus Surplus Management (₹ Mn) Average tenor of outstanding borrowing (months) As on Dec-18 Incremental Q3 borrowings ₹ 6,780 Mn for 133 months at 9.16% 3,495 2,528 <3months 967 5,970 4,124 <6months 139 1,846 136 127 <1year 10,546 6,172 4,374 106 24,813 <3years 12,165 12,648 80
Slide 29: Comfortable Liquidity Position
Comfortable Liquidity Position Comfortable Liquidity for Growth (₹ Mn) Liquidity Position Sanctioned Debt ~ ₹ 10,220 Mn ~ 24,500 Cash & Cash Equivalents ~ ₹ 7,180 Mn Sanctioned Debt ~ 17,400 Q1FY19 ~ ₹ 3,550 Mn Q2FY19 ~ ₹ 1,850 Mn Dec 18 Liquidity Principal Profit Debt Repayment Dec 19 Liquidity Pos
Slide 30: Further Diversified Sources of Long Term Fund in Q3 FY19
Further Diversified Sources of Long Term Fund in Q3 FY19 Rupee Denominated Masala NHB Refinance Assistance of Assignment of Mortgage Loan Bonds of ₹ 2,000 Mn ₹ 5,000 Mn • Raised ₹ 2,000 Mn from CDC Group, • ₹ 4,000 Mn in addition to the approval • Executed ₹ 1,200 Mn assignment of a UK’s Development
Slide 31: Key Financial Ratios
Key Financial Ratios ROE (%) Book Value Per Share (₹) 14.1% 14.7% 228.1 10.9% 123.4 111.7 Dec-16 Dec-17 Dec-18 Dec-16 Dec-17 Dec-18 Capital Adequacy Ratio (%) Earning Per Share* (₹) Tier I Tier II 67.8% 16.2 12.2 46.3% 11.1 31.5% 5.4% 4.6% 0.7% Dec-16 Dec-17 Dec-18 Dec-16 Dec-17 Dec-18 Data of Capit
Slide 32: Ind-AS Transition
Ind-AS Transition Sr. No. Key Changes Impacted Line Item IGAAP Ind-AS 1 Net Fees Income Fees Income Booked upfront Amortized based on Effective Interest Rate 2 Credit Costs Credit Costs As specified by regulator Expected Credit Loss (ECL) Model Option value under Black Scholes pricing model 3 ESOP V
Slide 33: ECL Model – Key Differences
ECL Model – Key Differences Sr. No. Components NHB Regulations ECL Model • Standard Assets: Performing • Stage 1: Performing – 1 to 30 DPD • Sub-Standard Assets: NPA < 15 months 1 Asset Classification Norms • Stage 2: Under-Performing – 31 to 90 DPD • Doubtful Assets: NPA > 15 months • Stage 3: Non-
Slide 34: Annexures
Annexures Quarterly and Nine Monthly Profit & Loss Statement Balance Sheet PAT Reconciliation ECL Provisioning Networth Reconciliation 33
Slide 35: Quarterly Profit & Loss Statement
Quarterly Profit & Loss Statement Particulars (₹ Mn ) Q3-CY Q3-PY Y-o-Y PY Q2-CY Q-o-Q CY Interest Income 1,866.4 1,235.9 1,584.1 Interest Expenses 627.3 519.5 621.8 Net Interest Income 1,239.1 716.5 72.9% 962.3 28.8% Non-Interest Income 81.0 23.1 55.4 Non-Interest Expenses 485.2 357.0 440.2 Provisi
Slide 36: Nine Monthly Profit & Loss Statement
Nine Monthly Profit & Loss Statement Particulars (₹ Mn ) 9M FY19 9M FY18 Y-o-Y Interest Income 4,871.6 3,369.8 Interest Expenses 1,830.6 1,421.0 Net Interest Income 3,041.1 1,948.7 56.1% Non-Interest Income 186.3 97.5 Non-Interest Expenses 1,363.4 968.0 Provisions, Contingencies and Write Offs 54.9
Slide 37: Balance Sheet
Balance Sheet 31-Dec-18 31-Mar-18 Particulars (₹ Mn ) (Ind-AS) (Ind-AS) Sources of Funds Share Capital 781.1 691.7 Reserves & Surplus 17,038.7 11,207.3 Borrowings 31,527.1 27,550.5 Deferred Tax Liability (Net) 380.3 113.5 Other Liabilities & Provisions 709.4 838.0 Total 50,436.6 40,401.0 Application
Slide 38: PAT Reconciliation
PAT Reconciliation Particulars (₹ Mn ) 9M FY19 9M FY18 Y-o-Y Q3 FY19 Q3 FY18 Y-o-Y FY 18 Net Profit as per IGAAP 1,031.7 644.8 60.0% 411.0 234.0 75.6% 929.3 Add / (Less) : Adjustments as per IndAS on account of: Adoption of effective interest rate (EIR) for amortisation of Income and expenses - fina
Slide 39: ECL Provisions
ECL Provisions Classification of the Assets based on the ECL computation under IndAS: Particulars (₹ Mn ) 9M FY19 9M FY18 (Ind-AS) (I-GAAP) (Ind-AS) (I-GAAP) Gross Stage 3 GNPA 250.6 185.8 239.8 188.9 % portfolio in Stage 3 (GNPA%) 0.58% 0.45% 0.82% 0.69% ECL Provision Stage 3 40.1 46.0 38.4 51.8 Ne
Slide 40: Networth Reconciliation
Networth Reconciliation Particulars (₹ Mn ) 9M FY19 Net worth as per previous GAAP 16,650.4 Adjustments increasing/(decreasing) net worth as reported under previous GAAP: Adoption of EIR for amortisation of Income and expenses - financial assets at amortised cost / net interest on (194.3) credit imp
Slide 41: Thank You !
Contact Us Aavas Financiers Limited (Formerly known as Au HOUSING FINANCE LIMITED) CIN: L65922RJ2011PLC034297 Mr. Himanshu Agrawal investorrelations@aavas.in www.aavas.in Thank You ! Strategic Growth Advisors Private Limited CIN: U74140MH2010PTC204285 Ms. Payal Dave / Ms. Neha Shroff payal.dave@sgap