Arman Financial Services Limited · NSE:ARMANFIN

Arman Financial Services — 9MFY24 Earnings Presentation

41 slides from Arman Financial Services's earnings presentation, February 2024

  1. Slide 1: Arman Financial Services Limited Investor Presentation – February 2024

    ` Arman Financial Services Limited Investor Presentation – February 2024

  2. Slide 2: Safe Harbour

    Safe Harbour This presentation and the accompanying slides (the “Presentation”), which have been prepared by Arman Financial Services Ltd. (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for an

  3. Slide 3: Contents

    Contents Quarterly Business Update Page 4 - Page 8 About the Company Page 9 - Page 15 Presence in Attractive Retail Page 16 - Page 22 Lending Segments Efficient Liability Management Page 23 - Page 26 Strong Financial Performance Page 27 - Page 40 3

  4. Slide 4: Quarterly Business Update

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  5. Slide 5: 9MFY24 Performance Highlights

    9MFY24 Performance Highlights Assets Under INR 2,437 Crore Provisions and INR 42 Crore Management write offs Cumulative Provisions stood at ~INR 81.57 Crore (+48% Y-o-Y) (covering 3.35% of the consolidated AUM, 4.01% on -book) INR 1,628 Crore GNPA: 2.83% Disbursement Asset Quality (+43% Y-o-Y) NNPA:

  6. Slide 6: Recent Fund Raises (1/2)

    Recent Fund Raises (1/2) December – 2023 September - 2022 Company raised INR 230 crore via Shareholding Pattern as on 31 st Company raised INR 115 crore via allotment of CCDs December, on Fully diluted basis Qualified Institutional Placements of and OCRPS on a preferential basis Equity Shares Busine

  7. Slide 7: Recent Fund Raises (2/2)

    Recent Fund Raises (2/2) Fund Raised Converted on Converted on Outstading Net worth (INR Crore) Particulars 31-Mar-23 Particulars 30-Sep-22 30-Sep-23 30-Dec-23 31-Dec-23 Calculated as per IND-AS 770 INR 365 Equity Share Capital CCDs (Nos) 6,24,388 65,040 - 5,59,348 502 Crore 406 365 CCDs (Amount) 76

  8. Slide 8: Impact of RBI’s New Microfinance Guidelines

    Impact of RBI’s New Microfinance Guidelines Annual household income limit raised to INR 3 Lakh • Increased annual household limit from INR 1.25 Lakh to INR 3 Lakh will provide more headroom to NBFC- MFIs to lend to more customers. • This will help microfinance lenders to service consumers from diver

  9. Slide 9: About the Company

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  10. Slide 10: About Arman Financial Services

    About Arman Financial Services About the Company Business Performance Efficient Liability Management • A diversified NBFC focusing on large under-served rural & semi-urban • Consistent rating upgrades backed by strong financial & operating retail markets performance • Founded in 1992 by Mr. Jayendra

  11. Slide 11: Journey so Far

    Journey so Far 1992 1995 1998 2010 • Company Incorporated • Listing on BSE – • Launched 2W Loans • Launched Microfinance • Started bill discounting Issue subscribed business & Machine leasing 22x 2018 2017 2014-16 2013 2011 • Raised PE funding • Launched MSME Loans • Expanded to • Demerged MFI • Rai

  12. Slide 12: Geographical Footprint

    Geographical Footprint Geographical AUM Mix Number of (Consolidated) 9MFY24 9MFY23 Branches 12.6% Microfinance 315 260 2 27.3% 15 9.5% MSME 75 57 75 58 33 11.6% 2W & Rural 2W 4 4 9 84 69 14.9% 24.1% Total 394 321 41 Gujarat Uttar Pradesh 8 Madhya Pradesh Rajasthan Maharashtra Others Number of Branch

  13. Slide 13: Strong Underwriting Measures by Leveraging Digital Transformation

    Strong Underwriting Measures by Leveraging Digital Transformation Loan Management Instant Verification Of Key Details • Loan Utilization check • The LOS* & LMS* System facilitates instant • Instant pre-closure and pre-settlement and its verification simulation for the customer to understand • KYC Va

  14. Slide 14: Eminent Board of Directors

    Eminent Board of Directors Alok N. Prasad Jayendrabhai B. Patel Aalok J. Patel Chairman Vice Chairman & Managing Director Joint Managing Director • A veteran banker with over 35 years of regulatory, banking and • He has been an entrepreneur for 45 years. He was involved in a • He has 16 years of ban

  15. Slide 15: Competitive Moat

    Competitive Moat Focus on small ticket retail loans to the large under served informal segment customer in rural & semi urban geographies Diversifying products, geographies, sources of funds and delivering growth by increasing volumes rather than ticket sizes Competitive Conservative operations fram

  16. Slide 16: Presence in Attractive Retail Lending Segments

    Presence in Attractive Retail Lending Segments 16

  17. Slide 17: Product Offerings across Verticals

    Product Offerings across Verticals 83%* 13%* 3%* 1%* Microfinance - JLG MSME Loans Two-Wheeler Loans Individual Business Loans Average Ticket Size : INR 46,500 Average Ticket Size: Average Ticket Size: Average Ticket Size: (Cycle 1 & 2 -INR 20k - 60k INR 80,000 INR 71,000 INR 75,000 Cycle 3+ -INR 20

  18. Slide 18: Microfinance Loans

    Microfinance Loans (INR Crore) AUM* Disbursement Total Income Profit After Tax Avg. Ticket Size (INR) 2,046 1,362 383 100 46,000 46,500 1,367 949 209 38 9MFY23 9MFY24 9MFY23 9MFY24 9MFY23 9MFY24 9MFY23 9MFY24 9MFY23 9MFY24 *Includes Individual Business Loans • Disbursement: 100% Cashless • JLG model

  19. Slide 19: MSME Loans

    MSME Loans (INR Crore) AUM Disbursement Total Income Avg. Ticket Size (INR) 312 213 76 80,000 75,000 217 146 53 9MFY23 9MFY24 9MFY23 9MFY24 9MFY23 9MFY24 9MFY23 9MFY24 • Individual enterprise /working capital loans for small rural businesses in low competition • Disbursement: 100% Cashless areas • C

  20. Slide 20: 2W and Rural 2W Loans

    2W and Rural 2W Loans (INR Crore) AUM Disbursement Total Income Avg. Ticket Size (INR) 79 54 13 70,000 71,000 11 58 40 9MFY23 9MFY24 9MFY23 9MFY24 9MFY23 9MFY24 9MFY23 9MFY24 • Hypothecation (secured) loans given to self-employed /cash-salaried customer in the • Disbursement: 100% Cashless informal

  21. Slide 21: MSME Process Overview

    MSME Process Overview MSME Process Overview Sourcing Underwriting Collections • In-house sourcing team (No DSAs) • Credit bureau check (CRIF & CIBIL) • Team member that does sales also • handles collections • Feet-on-Street sales team model Physical FI & PD by in house credit manager at residence &

  22. Slide 22: Collection Efficiency

    Collection Efficiency Microfinance MSME Two-Wheeler Total 98.4% 97.4% 98.0% 98.7% 98.2% 98.6% 96.5% 96.3% 96.0% 98.4% 97.5% 98.0% Oct-23 Nov-23 Dec-23 Oct-23 Nov-23 Dec-23 Oct-23 Nov-23 Dec-23 Oct-23 Nov-23 Dec-23 Two- Update on Collections Particulars (INR Crore) Microfinance MSME Wheeler Total • C

  23. Slide 23: Efficient Liability Management

    Efficient Liability Management 23

  24. Slide 24: Strong Capitalization with Sufficient Liquidity

    Strong Capitalization with Sufficient Liquidity Capital Adequacy Ratio ALM Position (in Months) 65.8% 22 19 19 19 19 48.8% 17 17 17 17 16 32.6% 29.0% 26.4% 25.6% 20.3% 18.7% 31-Mar-21 31-Mar-22 31-Mar-23 31-Dec-23 Q3 FY 2 3 Q4 FY 2 3 Q1 FY 2 4 Q2FY24 Q3 FY 2 4 Arman (Standalone) Namra Av g T enur e

  25. Slide 25: Borrowing Profile

    Borrowing Profile Borrowing Mix (%) Top 5 Lending Partners (INR Crore) 1,518 1,888 2,161 2,245 2,240 Top 5 Lenders % of Borrowings Lender 1 - TL & DA 17.06% 29.3% 32.5% 33.0% 33.9% 35.7% Lender 2 - NCD 9.09% 1.9% Lender 3 - TL, PTC & DA 6.61% 2.0% 1.4% 1.3% 3.2% Lender 4 - TL&DA 6.26% 24.2% 19.7% 23

  26. Slide 26: Securitization

    Securitization Non-Bank Bank Partners Borrowings Borrowings Lending Partnerships NCDs & ECB 26

  27. Slide 27: Strong Financial Performance

    Strong Financial Performance 27

  28. Slide 28: 9M FY24 Consolidated Profit & Loss Statement

    9M FY24 Consolidated Profit & Loss Statement Particulars (INR Crore) Q3 FY24 Q3 FY23 Y-o-Y (%) Q2 FY24 Q-o-Q (%) 9M FY24 9M FY23 Y-o-Y (%) Income from Operations 168.8 103.0 160.3 478.6 274.6 Other Income 0.0 0.0 0.0 0.0 0.0 Gross Total Income 168.8 103.0 64% 160.3 5% 478.6 274.6 74% Finance Costs 7

  29. Slide 29: Balance Sheet - December 2023

    Balance Sheet - December 2023 Particulars (INR Crore) Consolidated Standalone Particulars (INR Crore) Consolidated Standalone ASSETS Dec-23 Mar-23 Dec-23 Mar-23 LIABILITIES & EQUITY Dec-23 Mar-23 Dec-23 Mar-23 Financial Assets Equity Share capital 9.8 8.5 9.8 8.5 Cash and cash equivalents 134.9 26.2

  30. Slide 30: Consolidated Business Performance

    Consolidated Business Performance (INR Crore) AUM Disbursement Gross Total Income 2,437 631 169 2,304 160 2,143 537 561 149 150 1,943 531 478 1,642 103 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Net Total Income Pre-provision Operating Pr

  31. Slide 31: Consolidated Business Performance

    Consolidated Business Performance Net Interest Margin (%) Cost to Income Ratio (%) Yield (%) 14.2% 14.1% 34.6% 28.3% 13.4% 13.1% 25.9% 26.2% 12.4% 23.9% 25.1% 27.0% 26.0% 25.4% 25.7% Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Asset Qualit

  32. Slide 32: PAR Movement

    PAR Movement PAR 31-90 (%) Movement GNPA (%) 8.3% 7.9% 7.8% 6.0% 6.9% 5.1% 3.0% 3.7% 4.1% 2.8% 3.7% 0.9% 2.4% 2.8% 2.5% 0.5% 5.0% 4.8% Mar-20 Mar-21 Mar-22 Mar-23 Dec-23 4.5% 4.3% 4.5% 3.9% 4.7% NNPA (%) 2.1% 1.9% 1.9% 1.4% 2.1% 2.1% 1.4% 1.1% 1.1% 1.1% 0.8% 0.9% 0.3% 0.6% 0.8% 0.3% 0.6% 0.5% Mar-20

  33. Slide 33: 9M FY24 – Standalone P&L Statement (2W & MSME)

    9M FY24 – Standalone P&L Statement (2W & MSME) Particulars (INR Crore) Q3 FY24 Q3 FY23 Y-o-Y (%) Q2 FY24 Q-o-Q (%) 9M FY24 9M FY23 Y-o-Y (%) • Standalone AUM grew by 42.3% Y-o-Y to INR 391 Crore as compared to INR 275 Crore Income from Operations 32.6 23.7 33.8 95.8 66.8 • Disbursement growth of 43.

  34. Slide 34: Standalone Business Performance

    Standalone Business Performance (INR Crore) AUM Disbursement Gross Total Income* 391 101 31 359 95 30 343 84 27 28 5 315 79 14 81 23 4 66 69 4 275 69 17 21 4 61 14 58 19 3 291 312 81 79 26 27 255 276 67 67 23 24 217 50 18 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q

  35. Slide 35: 9M FY24 – Namra Finance Profit & Loss Statement

    9M FY24 – Namra Finance Profit & Loss Statement Particulars (INR Crore) Q3 FY24 Q3 FY23 Y-o-Y (%) Q2 FY24 Q-o-Q (%) 9M FY24 9M FY23 Y-o-Y (%) • In Microfinance space, we steadily widened our coverage and deepened our presence through our wholly owned subsidiary Namra Income from Operations 136.2 80.

  36. Slide 36: Microfinance Business Performance – Namra Finance (1/2)

    Microfinance Business Performance – Namra Finance (1/2) (INR Crore) AUM Disbursement Gross Total Income 2,046 536 136 1,945 127 1,801 456 459 122 120 1,628 446 409 1,367 81 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Net Total Income Pre-p

  37. Slide 37: Microfinance Business Performance – Namra Finance (2/2)

    Microfinance Business Performance – Namra Finance (2/2) Net Interest Margin (%) Cost to Income Ratio (%) Yield (%) 20.5% 32.2% 27.0% 24.4% 25.3% 22.9% 23.8% 14.7% 23.1% 21.9% 13.3% 21.5% 21.5% 12.0% 12.0% Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 Q3FY23 Q4FY23 Q1FY24 Q2FY

  38. Slide 38: Strong Growth in AUM and Disbursements

    Strong Growth in AUM and Disbursements Total AUM (INR Crore) Total Disbursements (INR Crore) 1,943 1,767 13% 3% 13% 3% 1,233 13% 1,024 4% 880 860 814 778 14% 16% 4% 685 17% 84% 12% 84% 15% 10% 14% 11% 6% 547 12% 509 453 15% 83% 10% 17% 13% 5% 82% 10% 204 20% 72% 79% 248 248 75% 75% 172 71% 26% 0% 3%

  39. Slide 39: While Maintaining Cost Efficiency & Asset Quality

    While Maintaining Cost Efficiency & Asset Quality Gross and Net Total Income Yield & NIM (%) Asset Quality (INR Crore) Demonetization COVID-19 Demonetization COVID-19 Demonetization COVID-19 424 6.7% 28.7% 28.3% 27.4% 25.5% 26.7% 24.4% 21.5% 22.9% 252 235 17.4% 215 16.5% 16.5% 15.9% 195 14.0% 14.3%

  40. Slide 40: Annexure

    Annexure • Gross Interest Income = Interest Income + processing fees / other charges • Net Interest Margins = Net Interest Income / Average AUM (On + Off -Book) • Yields = Gross Interest Income / Avg. AUM (On + Off Off -Book) • Cost-to -Income Ratio = Opex (excl. provisions) / Net Total Income • GNP

  41. Slide 41: Thank You

    Thank You Contact Information Company: Investor Relations Advisors: Strategic Growth Advisors Pvt. Ltd. Arman Financial Services Limited CIN: U74140MH2010PTC204285 CIN: L55910GJ1992PLC018623 Mr. Abhishek Shah Mr. Vivek Modi abhishek.shah@sgapl.net Chief Financial Officer (CFO) +91 9930651660 Email :

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