Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY2023 Earnings Presentation
51 slides from Mahindra & Mahindra Financial Services's earnings presentation, Jul 28, 2022
Slide 1: Cover letter to stock exchanges
Mahindra FINANCE Mahindra & Mahindra Financial Services Ltd. Mahindra Towers, 4th Floor, Dr G. M. Bhosale Marg, Worli, Mumbai 400 018 India Tel: +91 22 66526000 28th July 2022 Fax: +91 22 24984170 +91 22 24984171 To, BSE Limited, (Security Code: 532720) Phiroze Jeejeebhoy Towers, Dalai Street, Fort,
Slide 2: Quarter Result Update June 2022
Mahindra & Mahindra Financial Services Limited Quarter Result Update June - 2022 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 6652 6000 Fax:+91
Slide 3: Transforming rural lives across the country
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 2
Slide 4: Executive summary (1/2)
Executive summary (1/2) Financial Performance ▪ Revenue at ₹ 2,499 crore for the quarter, an increase of 14% YoY resulting in PAT of ₹ 223 crores ▪ NIMs healthy at 8.2%; impact of increase in borrowing cost may reflect in subsequent quarters ▪ PPOP at ₹ 946 crores increased by 26% ▪ Overheads at 3.2
Slide 5: Executive summary (2/2)
Executive summary (2/2) Asset Quality ▪ Marginal increase in GS3 in the first quarter (GS-3 at 8.0% vs. 7.7% from Mar - 22) ▪ Despite seasonal volatility, able to limit increase through focused collection efforts including timely repossessions ▪ PCR maintained @ 58.1% in Jun-22; Continued with 100%
Slide 6: Business strength
Business strength Capital Adequacy Gross Stage-3 Stage 3 - Coverage Ratio 27.8% 58.1% 58.1% 15.5% 53.7% 25.9% 23.8% 7.7% 8.0% Q1 F22 F22 Q1 F23 Q1 F22 F22 Q1 F23 Q1 F22 F22 Q1 F23 Well capitalized Asset Quality under control Prudent 5
Slide 7: Financial Information - Standalone
Executive Summary Financial Information - Standalone Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 6
Slide 8: Break down of Disbursements
Break down of Disbursements on standalone basis Year ended Year ended Year ended Asset Class June – 22 June – 21 March – 22 Auto/ Utility vehicles 33% 36% 34% Tractors 13% 25% 16% Cars 18% 20% 19% Commercial vehicles and Construction equipments 12% 4% 8% Pre-owned vehicles 16% 12% 18% SME and Others
Slide 9: Break down of Business Assets
Break down of Business Assets on standalone basis Year ended Year ended Year ended Asset Class June – 22 June – 21 March – 22 Auto/ Utility vehicles 32% 29% 32% Tractors 15% 17% 16% Cars 21% 21% 22% Commercial vehicles and Construction equipments 12% 14% 12% Pre-owned vehicles 11% 12% 11% SME and Ot
Slide 10: Break down by Geography
Break down by Geography on standalone basis 16% Jun 2022 Jun 2022 10% 19% 11% Jun 2021 Jun 2021 14% 10% 15% 11% 19% 20% 18% 20% Business Assets 27% 25% 19% Disbursement * 24% 29% 31% 30% 31% CENTRAL EAST NORTH SOUTH WEST CENTRAL EAST NORTH SOUTH WEST NORTH: Chandigarh, Delhi, Haryana, Himachal Prade
Slide 11: Broad Based Liability Mix
Broad Based Liability Mix on standalone basis All figures in INR crores Funding Mix by Investor Category Funding Mix by type of Instrument Jun’22 Mar’22 Jun’22 Mar’22 Investor Type Instrument Type Amount % Share % Share Amount % Share % Share Banks / Dev. Institutions 30,882 52.1% 48.4% NCDs 15,082
Slide 12: ALM Position and Liability Maturity
ALM Position and Liability Maturity All figures in INR crores Cumulative Inflow Cumulative Outflow Cumulative Mismatch % 80,000 71,889 140% 70,000 61,940 120% 60,000 56,900 100% 50,000 47,040 80% 40,000 33,925 60% 30,000 21,678 23,635 20,000 40% 13,928 14,127 9,827 7,963 10,000 6,901 5,326 20% 3,176
Slide 13: Key Financials
Key Financials on standalone basis Disbursement Total Income Profit after Tax Q1 FY 23 Rs. 9,472 crores Rs. 2,499 crores Rs. 223 crores 145% 14% NA Q1 FY 22 Rs. 3,872 crores Rs. 2,187 crores Rs. (1,529) crores 12
Slide 14: Growth Trajectory
Growth Trajectory on standalone basis Loan Book (1) (Rs. crores) Revenues (Rs. crores) 64,993 10,245 10,517 59,947 60,445 63,099 9,719 56,408 2,187 2,499 FY20 FY21 FY22 Q1 FY22 Q1 FY23 FY20 FY21 FY22 Q1 FY22 Q1 FY23 Pre-Provisioning Operating Profit (Rs. crores) Profit after Tax (2) (Rs. crores) 4,1
Slide 15: Financial Performance
Financial Performance on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 39.6% 37.3% 35.8% 36.0% 28.2% 1.3% 1.3% 1.2% 0.4% NA FY20 FY21 FY22 Q1 FY22 Q1 FY23 FY20 FY21 FY22 Q1 FY22 Q1 FY23 Return on Net Worth (RONW) (2) (%) Asset Quality (%) 15.46% Gross Stage 3 Net Stage
Slide 16: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in crores) Q1FY23 Q1FY22 Y-o-Y FY22 Revenue from operations (A) 2,486 2,179 14% 9,658 Less: Finance cost (B) 931 1,018 -8% 3,920 NII (C= A+B) 1,555 1,161 34% 5,738 Other Income (D) 12 8 53% 61 Total Income (E=C+D) 1,567 1,169 34% 5,799 Employee benef
Slide 17: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in crores) As on Jun 30, 2022 As on Jun 30, 2021 As on Mar 31, 2022 ASSETS Financial Asset a) Cash and cash equivalents 505 402 328 b) Bank balance other than (a) above 3,160 2,823 3,823 c) Derivative financial instruments 55 48 27 d) Trade Receivables 16 4
Slide 18: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in crores) As on Jun 30, 2022 As on Jun 30, 2021 As on Mar 31, 2022 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 206 146 182 b) Payables i) Trade payables 782 481 955 ii) Other payables 29 25 50 c) Debt Securities
Slide 19: Summary & Key Ratios
Summary & Key Ratios on standalone basis Quarter ended Quarter ended Year ended Particulars June – 22 June – 21 March – 22 RONW (Avg. Net Worth) - annualised 5.7% NA 6.5% Debt / Equity 3.75:1 4.21:1 3.57:1 Capital Adequacy 25.9% 23.8% 27.8% Tier I 22.8% 20.1% 24.3% Tier II 3.1% 3.7% 3.5% EPS (Basic)
Slide 20: Spread Analysis
Spread Analysis on standalone basis Quarter ended Quarter ended Year ended Particulars June – 22 June – 21 March – 22 Total Loan Income / Average Business Assets 13.7% 12.6% 13.8% Total Income / Average Assets 13.0% 11.8% 12.8% Interest cost / Average Assets 4.8% 5.5% 5.2% Gross Spread 8.2% 6.3% 7.6
Slide 21: Collection Efficiency and Restructuring
Collection Efficiency and Restructuring on standalone basis Collection Efficiency^ Apr May Jun Q1 FY 2023 90% 95% 96% 94% FY 2022 72% 67% 90% 80% ^ Computed as (Current month demand collected + Overdues collected)/(Current month demand due for the month) Without considering restructured contracts Nu
Slide 22: Stage 3 - Analysis
Stage 3 - Analysis on standalone basis Particulars (Rs. in crores) except figures in % As on Jun 30, 2022 As on Jun 30, 2021 As on Mar 31, 2022 As on Mar 31, 2021 Business Assets (including Provisions) 67,693 63,582 64,961 64,608 Gross Stage 3 5,436 9,832 4,976 5,786 Less: Stage 3 ECL Provisions 3,1
Slide 23: Credit Charge
Credit Charge on standalone basis Q1FY23 Q1FY22 FY22 FY21 Stage-1 Provisions 68 (33) 22 (127) Stage-2 Provisions (260) 621 295 119 Stage-3 Provisions 267 1,929 (462) 1,572 Provisions – P&L Charge 75 2,517 (145) 1,564 Write-Offs 570 302 2,513 2,171 Total 645 2,819 2,368 3,735 Figures re-grouped and r
Slide 24: Stage Wise Provisioning
Stage Wise Provisioning on standalone basis Stage-Wise Assets and Provisioning As on 30th Jun 2022 As on 30th Jun 2021 As on 31st Mar 2022 Rs. in crores Business Assets Provisions & Business Assets Provisions & Business Assets Provisions & (Amount and %) Coverage (Amount and %) Coverage (Amount and
Slide 25: Financial Information - Consolidated
Executive Summary Financial Information - Consolidated Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 24
Slide 26: Key Financials (Consolidated)
Key Financials (Consolidated) on consolidated basis Disbursement Total Income Profit after Tax Q1 FY 23 Rs. 9,867 crores Rs. 2,914 crores Rs. 240 crores 148% 14% NA Q1 FY 22 Rs. 3,972 crores Rs. 2,567 crores Rs. (1,573) crores 25
Slide 27: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Particulars (Rs. in crores) Q1FY23 Q1FY22 Y-o-Y FY22 Revenue from operations (A) 2,902 2,560 13% 11,318 Less: Finance cost (B) 1,052 1,151 -9% 4,418 NII (C= A+B) 1,850 1,409 31% 6,900 Other Income (D) 12 7 80% 83 Total Income (E=C+D) 1,862 1,416 32% 6,983 Employee
Slide 28: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in crores) As on Jun 30, 2022 As on Jun 30, 2021 As on Mar 31, 2022 ASSETS Financial Asset a) Cash and cash equivalents 905 509 765 b) Bank balance other than (a) above 3,426 3,145 4,062 c) Derivative financial instruments 55 48 27 d) Trade Receivables 73
Slide 29: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in crores) As on Jun 30, 2022 As on Jun 30, 2021 As on Mar 31, 2022 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 206 146 182 b) Payables i) Trade payables 923 632 1,113 ii) Other payables 30 25 51 c) Debt Securi
Slide 30: Key Subsidiaries
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 29
Slide 31: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Year ended Particulars (Rs. in crores) Q1FY23 Q1FY22 March – 22 Loans disbursed 395 100 1,602 No. of Customer Contracts (nos.) 16,162 3,060 75,327 Loans & Advances (net) 6,974 6,932 7,029 Total income 329 334 1,377 PBT 2 -94 58 PAT 2 -65 48 Net-worth 1,456 1,33
Slide 32: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Year ended Particulars (Rs. in crores) Q1FY23 Q1FY22 March – 22 No. of Policies for the Period (nos.) 5,02,358 3,12,937 18,63,160 Net Premium 635 448 2,360 Total income 89 60 348 PBT 3 5 70 PAT 2 3 52 No. of employees (nos.) 955 1,123 1,027 ▪ Business Area: License
Slide 33: Company Overview
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 32
Slide 34: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 1.42 trillion)* About MMFSL: MMFSL (Mcap: Rs 246 billion)*, one of India’s leading non-banking finance companies focused in the rural and semi-urban secto
Slide 35: 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 36: Our Journey
Our Journey Commenced Housing Finance Maiden Retail NCD Issue of Rs. business through MRHFL QIP Issue of Rs. 426 crores 1000 crores Oversubscribed over 7x of base Raised Rs. 414 crores through JV with Rabobank subsidiary for tractor issue size of Rs. 250 crores Rights Issue of Rs. Private Equity fin
Slide 37: Shareholding Pattern (as on June 30, 2022)
Shareholding Pattern (as on June 30, 2022) Shareholding Pattern Top 10 Public Shareholders ▪ Life Insurance Corporation Of India 12.13% ▪ Wishbone Fund, Ltd. ▪ HDFC Life Insurance Company Limited 17.95% ▪ HDFC Trustee Company Ltd 52.16% ▪ Ashish Dhawan 17.55% ▪ Valiant Mauritius Partners Offshore Li
Slide 38: Business Strategy
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 37
Slide 39: Business Strategy
Business Strategy Grow in rural and semi urban markets by providing financing, investment and insurance solutions Expand Branch Network Leverage existing customers base through Direct Marketing Initiatives Diversify Product Portfolio: Nurture new businesses of Digital Finance and Leasing Broad base
Slide 40: Transformation priorities
Transformation priorities 1 Stabilize Asset Quality Focus on bringing the volatility down 2 Recharge Growth Build high quality diversified business 3 Strengthen Tech & Digital Data informed thinking 4 Future Ready Human Capital High Performing Organisation 39 39
Slide 41: Sustainable profitable growth: Vision 2025
Sustainable profitable growth: Vision 2025 Stable asset quality 2x AUM New business contribution: GS-3 < 6% 15% Maintain NIMs ~7.5% Operating leverage: Cost to RoA ~2.5% Assets ~2.5% 40
Slide 42: Extensive Branch Network
Extensive Branch Network ◼ Extensive branch network with presence in 27 states and 7 union territories in India through 1,384 offices ◼ Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 2 1388 1384 21 1284 1321 1322 1182 35 27 28 893 38 15 3 2 116 15
Slide 43: 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 44: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives ▪ Foster a Digital Learning ecosystem that drives a culture of ▪ Next gen API commissioned for scaling partnerships, integrating anytime-anywhere learning. fintech ecosystem & create enterprise wide
Slide 45: 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+ -- Fixed Deposit Prog
Slide 46: Awards & CSR Initiatives
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 45
Slide 47: Awards & Accolades CSR Initiatives
Awards & Accolades CSR Initiatives ■ Ranked 54th among India Best Companies to Work 2021 by Great Place ■ To further solidify our adherence towards the well-being of the driver to Work ® Institute communities, your Company successfully completed the Phase I of its flagship program – ‘Swabhimaan’ imp
Slide 48: Risk Management Policies
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 47
Slide 49: 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 50: 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 51: Thank You
Thank You Transforming rural lives across the country 50
Mahindra & Mahindra Financial Services — Q1 FY2023 Earnings Presentation on 6ix