Sammaan Capital Ltd · NSE:SAMMAANCAP
Sammaan Capital — Indiabulls Housing Finance — CLSA Conference (November 2017)
24 slides from Sammaan Capital's conference presentation, Nov 15, 2017
Slide 1: Indiabulls Housing Finance
Indiabulls HOUSING FINANCE
Slide 2: Indian Home Loans Market
Indiabulls HOUSING FINANCE Indian Home Loans Market
Slide 3: Indian Housing Landscape
Indian Housing Landscape Regulator Government Push RERA to bring greater transparency Housing for All, PMAY, etc. and discipline Easier Credit Flow Fiscal Incentives Infrastructure status to housing; RBI, SEBI, Tax incentives/subsidies for IRDA eased exposure norms to mortgage buyers/developers fina
Slide 4: Housing Demand in India
Housing Demand in India • Estimated housing shortage: ~ 40 Mn houses (urban & rural) • Drivers of incremental demand: Current population growth Demand for 3.4 Mn houses p.a. @ 1.3% p.a. Ongoing nuclearisation Demand for 2.5 Mn houses p.a. @ 0.9% p.a. Rising income/aspirations – per capita GDP growth
Slide 5: Housing: From Social Objective to Centrepiece Economic Policy
Housing: From Social Objective to Centrepiece Economic Policy Opportunity to propel rural and urban economic activity and revive the capex cycle - Housing sector: 4th largest employment provider in India*: employment for both semi-skilled and unskilled labour - Housing and the larger real estate sec
Slide 6: PMAY and Tax Incentives for Mid-Income Affordable Housing
PMAY and Tax Incentives for Mid-Income Affordable Housing Illustration for Indiabulls Housing’s average Home Loan - House value : ₹ 3,500,000 - Home loan amount : ₹ 2,400,000 (Loan to value of 70%) - PMAY subsidy : ₹ 230,156 - Net loan amount : ₹ 2,169,844 Principal Repayment Opening Loan Interest P
Slide 7: EMI Smaller than Rent Cheque: PMAY and Tax Incentive
EMI Smaller than Rent Cheque: PMAY and Tax Incentive for Mid-Income Affordable Housing Rental Yield v/s Home Loan Cost 5.0% 4.0% 3.4% 3.5% 3.9% 3.1% 3.4% 3.2% 2.3% 2.9% 2.6% 2.6% 2.7% 0.30% Rental yield Effective Interest Rate on Home Loans with PMAY (0.30%) Source: NHB; Industry reports Increasing
Slide 8: Mortgage Market Growth: HFCs Stealing a March
Mortgage Market Growth: HFCs Stealing a March Growing HFC Market Share in a Steadily Expanding Home Loans Market 17% 18% CAGR HFC CAGR: 21% 22% 14,405 17% 18% 14.9% 11% 40% 8.8% 11.4% 4,595 8.7% 7% 6.7% 6.3% 5.5% 33% 2.6% Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Liquidity (₹ Tn) 1.1 (
Slide 9: Opening up of Funding Avenues, Deepening Debt Capital Markets
Opening up of Funding Avenues, Deepening Debt Capital Markets and Increasing Financialization and Disintermediation Share of Financial Savings in Total Household Savings Moving into Mutual Funds and Savings Insurance 25.6 26.2 1.9 1.4 20.7 22.4 22.9 1.4 1.2 1.3 19% 58% 3% 48% 52% 50% 11% 45% -10% 0.
Slide 10: Home Loan Rates v/s Corporate Bond Spreads
Home Loan Rates v/s Corporate Bond Spreads 10.15% 9.90% 9.40% 9.85% 9.70% 8.35% 8.35% 9.25% 8.79% 8.00% 8.00% 8.37% 8.09% 7.11% 7.15% 1.53% 1.36% 1.31% 1.24% 1.20% Jun 14 Jun 15 Jun 16 Jun 17 Oct 17 Home Loan Rates SBI MCLR / Base Rate AAA Corporate Bond Yield Spread to AAA Corporate Bond System Cre
Slide 11: RoA Tree: Advantage on Cost of Funds Offset by High Opex
RoA Tree: Advantage on Cost of Funds More Than Offset by High Opex, Credit Costs & CRR/SLR Particulars AAA Rated HFCs Banks* Equity 13% 10% Borrowings/Deposits 87% 90% Loans 83% 66% Investments 17% 34% Home Loan Yield 8.35% 8.35% Cost of Funds 7.3% 5.4% Savings Deposit Rate 3.5% Yield on Investments
Slide 12: Indiabulls Housing Finance Limited
Indiabulls Housing Finance Limited 12
Slide 13: Indiabulls Group Companies
Indiabulls Group Companies Indiabulls Group Market Capitalisation: ₹ 768 Bn Indiabulls Housing Indiabulls Indiabulls Finance Limited Ventures Limited Real Estate Limited Rental Portfolio Housing Finance Consumer Finance Development Properties Market Cap ₹ 519.9 Bn Market Cap ₹ 130.4 Bn Market Cap ₹
Slide 14: 32 Quarters of 20%-25% Profit Compounding
32 Quarters of 20%-25% Profit Compounding NII Balance Sheet Loan Assets CAGR: 26% CAGR: 26% CAGR: 26% 1,158 1,037 1,003 48 913 764 38 687 30 572 522 24 27 391 444 412 19 322 275 344 15 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Sep-17 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Sep-17 FY12 FY13 FY14 FY
Slide 15: Balance Sheet Assets and Loan Assets
Balance Sheet Assets and Loan Assets Balance Sheet Assets Loan Assets 3% 22% 19% 78% 78% Loan Book Cash & Liquid Investments* Other Assets Retail Mortgage Loan Corporate Mortgage Loans • Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of ₹ 2.4 M
Slide 16: Home Loan Profile: Focus on Mid-Income Affordable Housing
Home Loan Profile: Focus on Mid-Income Affordable Housing Average Loan Size ₹ 2.4 Mn Maximum Loan to Value 80% Average Loan to Value 73% (at origination) Average Loan Term 15 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing • PMAY extended to Middle Income Group
Slide 17: Smart City Home Loan: Technology-led Cost-effective
Smart City Home Loan: Technology-led Cost-effective Geographical Expansion through eHome Loans Platform 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 finance
Slide 18: 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 19: Asset Quality
Asset Quality As at September 30, 2017 0.84% 0.83% (in ₹ Bn) 0.78% NPA (90+ dpd*): 7.82 Provisions for 0.49% 0.49% 0.47% Contingencies: 12.24 0.35% 0.34% Of which 0.31% NPAs: 4.71 Other provisioning: 7.53 Regulatory Provisioning: 7.70 Sep-15 Sep-16 Sep-17 Excess Provisioning over Gross NPA General &
Slide 20: Funding Mix
Funding Mix 3% 3% 3% 9% 10% 10% 37% 35% 33% ECB Sell Down Bank Loans 51% 52% 54% Debentures and Securities Mar-17 Jun-17 Sep-17 Total Funding (₹ Bn) Net Incremental Contribution to Incremental Sep 17 Mar 17 in 6 Months Borrowings in last 6 Months Bank Loans 353.2 346.6 6.6 5.0% Debentures and Securi
Slide 21: Evolution of Distribution Model and Geographical Coverage
Evolution of Distribution Model and Geographical Coverage Turn-around Underwriting Geographical Sourcing Time for Loan Approach Coverage Appraisal* Pre-2010 Branch Based Manual decisioning 5 to 7 days Metro-centric: Point-of-sale: >85% for top-20 2010 Pen-and-paper based 2 days Construction sites ci
Slide 22: Update on OakNorth Bank
Update on OakNorth Bank • Indiabulls Housing Finance Ltd has sold 10%, one-third of its stake, in OakNorth Bank to Govt of Singapore owned investment arm GIC for ₹ 7.7 Bn. In Nov 2015, IBHFL had invested ₹ 6.6 Bn in OakNorth Bank • IBHFL still retains ~20% stake in OakNorth Bank valued at ₹ 15.1 Bn.
Slide 23: 2020 Goals
2020 Goals FY17 FY20 Balance Sheet Size (₹ Bn) 1,037.1 2,010.0 Net Earnings (₹ Bn) 29.1 55.0 Cost-to-Income Ratio 13.3% 9.8% Annualised Credit Cost 0.83% 0.65% Home Loan Proportion 56% 66% Spread 324 bps 300 to 325 bps Geographical Mix Top 20 cities 70% 50% Other Towns & Cities 30% 50% 23
Slide 24: Thank you
Indiabulls HOUSING FINANCE Thank you
Indiabulls Housing Finance — CLSA Conference (November 2017) on 6ix