Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY2019 Earnings Presentation
46 slides from Mahindra & Mahindra Financial Services's earnings presentation, Jan 25, 2019
Slide 1: Exchange covering letter: Investors / Analysts' Presentation
MahindraF NANCE Mahindra & Mahindra 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 25th January, 2019 The General Manager-Department of The Manager-Listing Department, Corporate Service
Slide 2: Quarter Result Update December 2018
Mahindra & Mahindra Financial Services Limited Quarter Result Update December - 2018 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:+9
Slide 3: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 2
Slide 4: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 866 billion)*, India’s largest tractor and utility vehicle manufacturer About MMFSL: MMFSL (Mcap: Rs 261 billion)*, one of India’s leading non-banking fin
Slide 5: MMFSL Group structure
MMFSL Group structure (1) 80% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 88.75%(2) Mahindra Rural Housing Finance Limited 51.19% (“MRHFL”) 49% Mahindra Finance USA LLC (Joint venture with Rabobank group subsidiary) Mahindra & Mahindra Financial Services Limited 100% Mahi
Slide 6: Our Journey
Our Journey Commenced housing finance Maiden Retail NCD Issue Long term debt rating business through MRHFL Maiden QIP Issue of Rs. 4.26 Bn of Rs. 1000 crores. Raised Rs. 2147 upgraded to AAA by Oversubscribed over 7 crores from Tranche India Ratings and Raised Rs. 4.14 Bn through JV with Rabobank su
Slide 7: Shareholding Pattern (as on 31st December, 2018)
Shareholding Pattern (as on 31st December, 2018) Shareholding Pattern Chart Top 10 Public Shareholders HDFC Standard Life Insurance Company Limited 8.20% Blackrock Global Funds Asian Dragon Fund Blackrock Global Funds - Asian Growth Leaders Fund 13.16% Kotak Funds - India Midcap Fund 51.19%
Slide 8: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 7
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% 141 150 15% 10.0% 100 67 3.0% 4.5% 5.5% 6.0% 5% 0.4% 0.8% 1.7% 11.3% 50 28 38 16 4.0% 0 -
Slide 10: Passenger Vehicles Industry: Overall Demand Drivers
Passenger Vehicles Industry: Overall Demand Drivers FY 08 – FY13 FY 13 – FY 18 FY 18 – FY 23 (P) Small cars and UV expected to continue growth Small Cars 11% 4% 7% – 9% as more households come under parameters, improving economic scenario, positive rural Large Cars 3% (5%) 1% – 3% sentiments Lar
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% Advancement of purchase expected since BS-VI implementation shall increase prices LCV 20% (
Slide 12: Tractors Industry: Overall Demand Drivers
Tractors Industry: Overall Demand Drivers FY 2016 FY 2017 FY 2018 FY 2019 (P) FY 2020 (P) FY 18 – FY 23 (P) Volume Growth Volume Growth Volume Growth Growth Growth Growth Tractors 493,764 (10%) 582,844 18% 711,478 22% 10% - 12% 6% - 8% 7% – 9% Long term growth of 7-9% over 5 yeats even after consi
Slide 13: Auto Industry Volume
Auto Industry Volume Domestic Sales 9MFY19 9MFY18 Y-o-Y FY18 FY17 Y-o-Y (Volume in ‘000) (Nos.) (Nos.) Growth (%) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 1,690 1,619 4% 2,173 2,103 3% UV’s 843 807 4% 1,114 944 18% Commercial Vehicles (CVs) M&HCVs 278 223 25% 340 302 1
Slide 14: Automobile Finance Market: 5 years Projected Growth
Automobile Finance Market: 5 years Projected Growth@15-17% Segment-wise growth in disbursement FY 13 (Rs. Bn.) CAGR FY 13 – FY 18 FY 18 (Rs. Bn.) CAGR FY 18 – FY 23 FY 23 (Rs. Bn.) Passenger vehicle 639 8% 959 15% 1,929 Commercial vehicle 452 8% 652 13% 1,179 Two wheelers 123 17% 270 16% 575 Three w
Slide 15: Housing Finance Growth
Housing Finance Growth Rs. Tn. Housing Portfolio 25 Banks HFCs Growth momentum in the sector expected to slow down 20 22.0 especially for HFC’s. However, demand side fundamentals 16.0 remain strong. 14.8 15 HFC's 5 Year CAGR 11.8 18%-19% Affordable housing a new growth engine. PSL enhancement 10
Slide 16: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 15
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 27 states and 5 union territories in India through 1,313 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 1,284 1,313 1,182 893 547 436 256 Mar'05 Mar'08 Mar'11 Mar'14 Ma
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 Nine months ended Nine months ended Year ended Asset Class December – 18 December – 17 March – 18 Auto/ Utility vehicles 24% 27% 26% Tractors 19% 20% 18% Cars 20% 21% 20% Commercial vehicles and Construction equipments 18% 12% 13% Pre-owned vehicles 1
Slide 21: Break down of AUM
Break down of AUM As on As on As on Asset Class December – 18 December – 17 March – 18 Auto/ Utility vehicles 26% 28% 27% Tractors 17% 18% 17% Cars 21% 23% 22% Commercial vehicles and Construction equipments 17% 13% 14% Pre-owned vehicles 9% 8% 8% SME and Others 10% 10% 12% As on 31st December 18, ~
Slide 22: Break down by Geography
Break down by Geography Central West WEST CENTRAL 9% 18% 16% 10% East Loan Assets 25% EAST South as on Dec 2018 SOUTH Disbursement 27% 19% for 9M FY2019 20% North 28% NORTH 28% NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttaranchal; EAST
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 Long term and Subordinated debt IND AAA Stable Short term debt IND A1+ -- CARE Ratings Outlook Long term and Subordinated debt CARE AAA Stab
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 (Dec’ 18) Funding Mix by type of Instrument (Dec’ 18) Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share NCDs 198,692 40% Ban
Slide 25: ALM Position
ALM Position Cumulative Mismatch Cumulative Surplus (%) - Positive (INR cr.) 12,000 120.0% 10,000 9,742 100.0% 7,793 8,000 80.0% 5,794 6,000 60.0% 4,495 4,000 3,569 40.0% 3,131 1,936 2,000 20.0% - 0.0% Upto Upto Upto Upto Upto Upto Upto 1 month 2 months 3 months 6 months 1 year 3 years 5 years As on
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: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 26
Slide 28: Disclaimer
Disclaimer This is the first financial year of Indian Accounting Standards (“IND-AS”) for the purposes of the Company’s financial reporting. The impact of the transition from previous GAAP (“I-GAAP”) has been made in the opening reserves of FY 2018 Except the nine-months account’s (9M-FY19) wh
Slide 29: Key Financials
Key Financials Figures on standalone basis Total Income Profit after Tax Value of Asset Financed Q3 FY 19 Rs. 22,462 mn Rs. 3,187 mn Rs. 132,904 mn 23% 20% 24% Q3 FY 18 Rs. 18,311 mn Rs. 3,963 mn Rs. 107,055 mn 9M FY 19 Rs. 63,343 mn Rs. 9,691 mn Rs. 344,847 mn 30% 27% 33% 9M FY 18 Rs. 48,793 mn Rs.
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 582.40 72.06 510.04 62.38 63.34 59.05 423.56 448.42 48.79 366.62 FY16 FY17 FY18 9MFY18 9MFY19 FY16 FY17 FY18 9MFY18 9MFY19 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) I-GAA
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 2.2% 2.2% 1.8% 1.9% 42.9% 39.7% 39.3% 36.1% 36.6% 1.0% FY16 FY17 FY18 9MFY18 9MFY19 FY16 FY17 FY18 9MFY18 9MFY19 Return on Net Worth (RONW) (%) Asset Quality I-GA
Slide 32: Standalone Profit & Loss Account: IND-AS
Standalone Profit & Loss Account: IND-AS Accounting Basis As per IND-AS Particulars (Rs. in Million) Q3FY19 Q2FY19 Q-o-Q Q3FY18 Y-o-Y FY 18 Revenue from operations 22,225 21,033 5.7% 18,186 22.2% 66,295 Less: Finance cost 10,185 9,367 8.7% 8,158 24.8% 30,955 NII 12,040 11,666 3.2% 10,028 20.1% 35,34
Slide 33: Standalone Profit & Loss Account: IND-AS
Standalone Profit & Loss Account: IND-AS Accounting Basis As per IND-AS Nine months ended Nine months ended Particulars (Rs. in Million) Y-o-Y FY 18 Dec – 18 Dec – 17 Revenue from operations 62,516 48,340 29.3% 66,295 Less: Finance cost 28,039 23,056 21.6% 30,955 NII 34,477 25,284 36.4% 35,340 Other
Slide 34: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Dec 31, 2018 Particulars (Rs. in Million) As on Dec 31, 2018 EQUITY AND LIABILITIES ASSETS Shareholders' funds Non-current assets a) Property, Plant and Equipment 1,192 a) Share Capital 1,230 b) Capital work-in-progress 0 b) Reserves and Su
Slide 35: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis As per IND-AS Nine months ended Nine months ended Year ended Particulars (Rs. in Million) Dec – 18 Dec – 17 March – 18 RONW (Avg. Net Worth) ^ 13.0% 12.5% 13.3% Debt / Equity 4.83:1 3.93:1 4.17:1 Capital Adequacy$ 19.4% 23.5% 21.9% Tier I 14.7% 17.0%
Slide 36: Spread Analysis
Spread Analysis Figures on standalone basis As per IND-AS Nine months ended Nine months ended Year ended Particulars (Rs. in Million) Dec – 18 Dec – 17 March – 18 Total Income / Average Assets 14.6% 14.0% 13.9% Interest / Average Assets 6.5% 6.6% 6.4% Gross Spread 8.1% 7.4% 7.5% Overheads / Average
Slide 37: NPA Analysis (As per IND-AS)
NPA Analysis (As per IND-AS) Figures on standalone basis Particulars (Rs. in Million) As on Dec 31, 2018 As on Dec 31, 2017 As on Mar 31, 2018 Total Assets (including Provisions) 655,193 517,609 557,826 Gross NPA (Stage 3) 50,645 63,542 50,419 Less: ECL Provisions (Stage 3) 13,611 22,912 17,161 Net
Slide 38: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 37
Slide 39: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Accounting Basis As per IND-AS Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 18 December – 17 March – 18 Loans disbursed 17,768 17,599 27,892 No. of Customer Contracts (nos.) 114,776 124,539 218,572 Outstanding loan book 73
Slide 40: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited As per IND-AS Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 18 December – 17 March – 18 No. of Policies for the Period (nos.) 1,669,594 1,461,525 2,058,613 Net Premium 12,902 11,575 17,490 Total income 2,237 1,568 2451 PBT 643
Slide 41: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 40
Slide 42: Awards and Accolades
Awards and Accolades ■ Mahindra Finance has been ranked at 14th position in India’s Best Companies to Work for 2018 by The Great Place to Work Institute® and Economic Times ■ Mahindra Finance Appraised and Rated at Level 5 of People Capability Maturity Model®, being the 1st NBFC Globally to achieve
Slide 43: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 42
Slide 44: 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 <= 90 days past due PD * LGD * Stage 2 Asset Stage 3 > 90 days past due LGD * EAD of Stage 3 Asset PD – Probability of Default; LGD – Loss given Defa
Slide 45: 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 46: Thank You
Thank You Transforming rural lives across the country 45
Mahindra & Mahindra Financial Services — Q3 FY2019 Earnings Presentation on 6ix