Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY2020 Earnings Presentation
49 slides from Mahindra & Mahindra Financial Services's earnings presentation, Jul 23, 2019
Slide 1: Cover letter to stock exchanges: Investors / Analysts' Presentation
Mahindra & Mahindra MahindraFINANCE 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 23rd July, 2019 The General Manager-Department of The Manager-Listing Department, Corporate Services,
Slide 2: Quarter Result Update June 2019
Mahindra & Mahindra Financial Services Limited Quarter Result Update June - 2019 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:+91
Slide 3: Agenda
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 2 MahindraFINANCE
Slide 4: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 702 billion)*, India’s largest tractor and utility vehicle manufacturer About MMFSL: MMFSL (Mcap: Rs 221 billion)*, one of India’s leading non-banking fin
Slide 5: MMFSL Group structure
MMFSL Group structure (1) 80% Mahindra Mahindra Insurance Brokers Limited (“MIBL”) Rise. Mahindra & Mahindra Limited 98.43%(2) Mahindra Rural Housing Finance Limited (“MRHFL”) 51.19% 49% Mahindra Finance USA LLC MahindraFINANCE > > (Joint venture with Rabobank group subsidiary) Mahindra & Mahindra F
Slide 6: Our Journey
Our Journey Commenced housing finance Maiden Retail NCD Issue Raised Rs. 2147 Long term debt rating business through MRHFL Maiden QIP Issue of Rs. 4.26 Bn of Rs. 1000 crores. crores from upgraded to AAA by Oversubscribed over 7 Tranche 1 of the India Ratings and Raised Rs. 4.14 Bn through JV with Ra
Slide 7: Shareholding Pattern (as on 30th June, 2019)
Shareholding Pattern (as on 30th June, 2019) Shareholding Pattern Chart Top 10 Public Shareholders 7.93% HDFC Life Insurance Company Limited Life Insurance Corporation Of India Kotak Funds - India Midcap Fund 14.55% Blackrock Global Funds Asian Dragon Fund 51.19% Blackrock Global Funds - A
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 MahindraFINANCE
Slide 9: Auto Industry: Long term growth potential
Auto Industry: Long term growth potential Expansion in Addressable market with Low Cost of Ownership Decile-wise penetration (Urban versus Rural) (Mn) 55% 350 326 44.5% 45% 292 300 255 35% 250 224 200 25% 18.6% zr 141 150 15% 10.0% 100 4.5% 5.5% 6.0% . 67 3.0% 11.3% 5% 0.4% 0.8% 1.7% 50 16 28 37 _ii
Slide 10: Passenger Vehicles Industry: Overall Demand Drivers
Passenger Vehicles Industry: Overall Demand Drivers FY 08 – FY13 FY 14 – FY 19 FY 19 – FY 24 (P) Small cars and UV expected to continue growth. However muted growth in FY20 and FY21 shall Small Cars 11% 5% 3% – 5% significantly reduce the 5 year growth projection Large Cars 3% (2%) (2%) – 0% Hig
Slide 11: Commercial Vehicles Industry: Overall Demand Drivers
Commercial Vehicles Industry: Overall Demand Drivers Lower finance availability hurting MHCV sales. CV FY 08 – FY 13 FY 13 – FY 18 FY 18 – FY 23 (P) lending rates increased marginally MHCV (1%) 7% 6% – 8% Reduction in sale price of second hand vehicles resulting in slower buying of new vehicles
Slide 12: Tractors Industry: Overall Demand Drivers
Tractors Industry: Overall Demand Drivers FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 (P) FY 2021 (P) FY 19 – FY 24 (P) Volume Growth Volume Growth Volume Growth Growth Growth Growth Growth 493,764 (10%) 582,844 18% 711,478 22% 8% 1% – 3% 2% – 4% 2% – 4% Long term growth of 2-4% over 5 years after con
Slide 13: Auto Industry Volume
Auto Industry Volume Domestic Sales 1QFY20 1QFY19 Y-o-Y FY19 FY18 Y-o-Y (Volume in ‘000) (Nos.) (Nos.) Growth (%) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 447 584 (24%) 2,219 2,174 2% UV’s 265 290 (9%) 1,159 1,115 4% Commercial Vehicles (CVs) M&HCVs 74 89 (17%) 391 341
Slide 14: Automobile Finance Market: Projected Growth
Automobile Finance Market: 5 years Projected Growth@15-17% Segment-wise growth in disbursement FY 14 (Rs. Bn.) CAGR FY 14 – FY 19 FY 19 (E) (Rs. Bn.) CAGR FY 19 – FY 24 FY 24 (P) (Rs. Bn.) Passenger vehicle 696 8% 1,032 10% - 12% 1,747 Commercial vehicle 351 20% 859 5% - 7% 1,171 Two wheelers 140 18
Slide 15: Housing Finance Growth
Housing Finance Growth Rs. Tn. Housing Portfolio 25 Banks HFCs 21.6 Growth momentum in the sector expected to slow 20 down especially for HFC’s. However, demand side 16.0 14.8 fundamentals remain strong. 15 HFC's 5 Year CAGR 11.8 18%-19% Affordable housing a new growth engine. 10 8.3 PSL enhance
Slide 16: Business Strategy
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 15 MahindraFINANCE
Slide 17: 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 18: Extensive Branch Network
Extensive Branch Network Extensive branch network with presence in 28 states and 5 union territories in India through 1,334 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 1,284 1,321 1,334 1,182 893 547 436 256 Mar'05 Mar'08 Mar'11 Mar
Slide 19: 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 20: Break down of estimated value of Assets Financed
Break down of estimated value of Assets Financed Quarter ended Quarter ended Year ended Asset Class June – 19 June – 18 March – 19 Auto/ Utility vehicles 27% 24% 25% Tractors 17% 19% 18% Cars 20% 21% 20% Commercial vehicles and Construction equipments 18% 17% 19% Pre-owned vehicles 16% 14% 14% SME a
Slide 21: Break down of AUM
Break down of AUM As on As on As on Asset Class June – 19 June – 18 March – 19 Auto/ Utility vehicles 26% 27% 26% Tractors 17% 17% 17% Cars 21% 22% 21% Commercial vehicles and Construction equipments 19% 14% 18% Pre-owned vehicles 9% 8% 9% SME and Others 8%* 12% 9% As on 30th June 19, ~43% of the AU
Slide 22: Break down by Geography
Break down by Geography West Central WEST CENTRAL 16% 10% 12% 12% East SOUTH Loan Assets 25% 19% Disbursement EAST South as on June, 2019 For 1QFY2020 24% 20% North NORTH 29% 33% NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttaranchal; EA
Slide 23: 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 (including MLD) and Subordinated debt Stable IND PP-MLD AAA emr Short term debt > IND A1+ -- CARE Ratings Outlook I Long t
Slide 24: Broad Based Liability Mix
Broad Based Liability Mix Working Capital Consortium Facility enhanced to Rs. 20,000 mn. comprising several banks Funding Mix by Investor profile (Jun’19) Funding Mix by type of Instrument (Jun’19) Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share Banks 246,213 44.8% NC
Slide 25: ALM Position
ALM Position Cumulative Mismatch Cumulative Surplus (%) - Positive (INR cr.) 12,000 11,374 160% 140% 10,000 120% 7,940 8,000 7,506 100% 6,024 6,000 5,215 80% 4,698 3,847 60% 4,000 40% 2,000 20% - 0% Upto Upto Upto Upto Upto Upto Upto 1 month 2 months 3 months 6 months 1 year 3 years 5 years As on 30
Slide 26: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Training programs for employees on regular basis All our offices are connected to the centralised data centre in Mumbai through Lease line/HHD 5 days induction program on product knowledge, bus
Slide 27: Financial Information
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 26 MahindraFINANCE
Slide 28: Key Financials (Standalone)
Key Financials (Standalone) Total Income Profit after Tax Value of Asset Financed Q1 FY 20 Rs. 24,125 mn Rs. 684 mn Rs. 105,983 mn 24% 75% 3% I I I I Q1 FY 19 Rs. 19,397 mn I I Rs. 2,691 mn I I Rs. 103,387 mn I I I I I I I I I I I I I I I I I I I I * As per IND-AS 27 MahindraFINANCE
Slide 29: Key Financials (Consolidated)
Key Financials (Consolidated) Total Income Profit after Tax Value of Asset Financed Q1 FY 20 Rs. 28,384 mn Rs. 1,085 mn Rs. 110,959 mn Q1 FY 19 23% Rs. 23,020 mn 66% Rs. 3,223 mn i 0% Rs. 111,166 mn * As per IND-AS 28 MahindraFINANCE
Slide 30: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) I-GAAP IND-AS I-GAAP IND-AS 1 88.10 612.50 1 623.96 i 72.06 510.04 485.47 1 515.95 66.85 1 62.38 423.56 1 1 1 1 24.13 1 19.40 r 1 I 1 1 1 FY17 FY18 FY18 FY19 1 Q1FY19 Q1FY20 FY17 FY18 FY18 FY19 Q1FY19 Q1FY20 Profit af
Slide 31: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) I-GAAP IND-AS I-GAAP IND-AS 2.6% 1 1 43.6% 2.2% 1 42.9% 1 2.0% 39.7% 39.8% 1.9% 38.0% 1 35.3% 1 1 1.0% 1 -I- 1 1 0.4% 1 1 FY17 FY18 FY18 FY19 Q1FY19 Q1FY20 1 FY17 FY18 FY18 FY19 1 Q1FY19 Q1F
Slide 32: Standalone Profit & Loss Account: IND-AS
Standalone Profit & Loss Account: IND-AS Accounting Basis As per IND-AS Particulars (Rs. in Million) Q1FY20 Q1FY19 Y-o-Y FY19 Revenue from operations 23,940 19,286 24.1% 87,229 Less: Finance cost 11,282 8,488 32.9% 39,445 NII 12,658 10,798 17.2% 47,784 Other Income 185 111 66.2% 869 Total Income 12,
Slide 33: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Jun 30, 2019 As on Jun 30, 2018 As on Mar 31, 2019 ASSETS Financial Asset a) Cash and cash equivalents 2,735 2,447 5,017 b) Bank balance other than (a) above 5,365 1,271 4,568 c) Derivative financial instruments 50 244 100 d) Trade Receivab
Slide 34: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in Million) As on Jun 30, 2019 As on Jun 30, 2018 As on Mar 31, 2019 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 622 8 770 b) Payables i) Trade payables 8,812 11,908 9,795 ii) Other payables 262 - 342 c) Debt Sec
Slide 35: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Particulars (Rs. in Million) Q1FY20 Q1FY19 Y-o-Y FY19 Revenue from operations 28,219 22,927 23.1% 103,717 Less: Finance cost 12,626 9,567 32.0% 44,323 NII 15,593 13,360 16.7% 59,394 Other Income 165 92 79.2% 592 Total Income 15,758 13,452 17.1% 59,986 Employee bene
Slide 36: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in Million) As on Jun 30, 2019 As on Jun 30, 2018 As on Mar 31, 2019 ASSETS Financial Asset a) Cash and cash equivalents 4,538 2,898 5,372 b) Bank balance other than (a) above 5,365 1,271 4,568 c) Derivative financial instruments 50 244 100 d) Trade Receiv
Slide 37: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in Million) As on Jun 30, 2019 As on Jun 30, 2018 As on Mar 31, 2019 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 4,613 4,173 770 b) Payables i) Trade payables 10,118 12,742 11,143 ii) Other payables 376 - 342 c
Slide 38: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis As per IND-AS Quarter ended Quarter ended Year ended Particulars (Rs. in Million) June – 19 June – 18 March – 19 RONW (Avg. Net Worth) ^ 2.5% 11.0% 15.2% Debt / Equity 4.99:1 4.31:1 4.84:1 Capital Adequacy$ 19.4% 21.9% 20.3% Tier I 14.9% 16.6% 15.5% T
Slide 39: Spread Analysis
Spread Analysis Figures on standalone basis As per IND-AS Quarter ended Quarter ended Year ended Particulars (Rs. in Million) June – 19 June – 18 March – 19 Total Income / Average Assets 14.2% 14.3% 14.7% Interest / Average Assets 6.6% 6.3% 6.6% Gross Spread 7.6% 8.0% 8.1% Overheads / Average Assets
Slide 40: NPA Analysis (As per IND-AS)
NPA Analysis (As per IND-AS) Figures on standalone basis Particulars (Rs. in Million) except figures in % As on Jun 30, 2019 As on Jun 30, 2018 As on Mar 31, 2019 Total Assets (including Provisions) 714,057 587,107 689,476 Gross NPA (Stage 3) 52,952 55,338 40,706 Less: ECL Provisions (Stage 3) 13,16
Slide 41: Key Subsidiaries
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 40 MahindraFINANCE
Slide 42: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Accounting Basis As per IND-AS Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 19 June – 18 March – 19 Loans disbursed 4,976 7,779 25,811 No. of Customer Contracts (nos.) 24,911 53,847 171,187 Outstanding loan book 78,722 70,833 76,892 T
Slide 43: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Accounting Basis As per IND-AS Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 19 June – 18 March – 19 No. of Policies for the Period (nos.) 538,578 554,338 2,265,146 Net Premium 4,673 4,035 19,238 Total income 796 667 3,234 PBT 88 213 1,029
Slide 44: Awards & Accolades
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 43 MahindraFINANCE
Slide 45: Awards and Accolades
Awards and Accolades ■ Great Places to Work has honored Mahindra Finance at the 8th Rank, in the India's Best Companies To Work For2019 *4- India’s Best Companies to Work 2019- a study by Economic Times. A STUDY BY Great Place To ■ Mahindra Finance has been ranked at 11th among the Best Large Workpl
Slide 46: Risk Management Policies
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 45 MahindraFINANCE
Slide 47: 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* *Fair valued at reporting date PD – Probability of
Slide 48: 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 49: Thank You
Thank You Transforming rural lives across the country 48 MahindraFINANCE
Mahindra & Mahindra Financial Services — Q1 FY2020 Earnings Presentation on 6ix