Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY2017 Earnings Presentation
46 slides from Mahindra & Mahindra Financial Services's earnings presentation, December 2016
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update
Mahindra & Mahindra Financial Services Limited Quarter Result Update December - 2016 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: +
Slide 2: 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 2
Slide 3: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 738 billion)*, India‟s largest tractor and utility vehicle manufacturer About MMFSL: MMFSL (Mcap: Rs 156 billion)*, one of India‟s leading non-banking fin
Slide 4: MMFSL Group structure
MMFSL Group structure (1) 85% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 87.5%(2) Mahindra Rural Housing Finance Limited 51.20% (“MRHFL”) 49% Mahindra Finance USA LLC (Joint venture with Rabobank group subsidiary) Mahindra & Mahindra Financial Services Limited 100% Mahin
Slide 5: Our Journey
Our Journey Commenced housing finance Long term debt rating business through MRHFL Maiden QIP Issue of Rs. 4.26 Bn upgraded to AAA by India Ratings and Maiden Retail NCD Issue Raised Rs. 4.14 Bn through JV with Rabobank subsidiary for Brickwork. of Rs. 1000 crores. Private Equity tractor financing i
Slide 6: Shareholding Pattern (as on 31st December 2016)
Shareholding Pattern (as on 31st December 2016) Shareholding Pattern Chart Top 10 Public Shareholders Franklin Templeton Investment Funds 6.7% Aranda Investments (Mauritius) Pte Ltd 11.0% Amansa Holdings Private Limited Life Insurance Corporation Of India 51.9% Bank Muscat India Fund 30.4%
Slide 7: 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 7
Slide 8: Auto Industry: Long term growth potential
Auto Industry: Long term growth potential Global Comparison in terms of PV per thousand people Addressable HHs to increase over the next 5 years 300 285 588 262 526 240 500 250 476 385 200 294 150 132 270 196 100 147 68 93 41 40 50 39 13 21 18 0 China Mexico S. Korea India Thailand Russia Japan USA
Slide 9: Passenger Vehicles Industry: Overall Demand Drivers
Passenger Vehicles Industry: Overall Demand Drivers FY 06 – FY11 FY 11 – FY 16 FY 16 – FY 21 Small Cars 14% 2% 12% - 14% Rising proportion of rural sales with increase in proportion of first time buyers will drive small Sedans 11% (1%) 8% - 10% cars and UV growth in long term UV + Vans 13% 6% 12%
Slide 10: Commercial Vehicles Industry: Overall Demand Drivers
Commercial Vehicles Industry: Overall Demand Drivers FY 11 – FY 16 FY 16 – FY 21 Growth to be witnessed as industrial activity improves, agricultural MHCV (goods) (1%) 9% - 11% output steadies and infrastructure projects receive focus LCV (goods) 1% 11% - 14% Demand for LCVs fuelled by increase
Slide 11: Tractors Industry: Overall Demand Drivers
Tractors Industry: Overall Demand Drivers Industry - Tractors FY 2015 FY 2016 FY 2017 (E) FY 16 – FY 21 (P) Volume Growth Volume Growth Growth Growth Tractors 551,463 (13%) 493,764 (10%) 15% - 17% 9% - 11% Normal rainfall after 2 years of below – average rainfall (+/- 4% considered normal) Demon
Slide 12: Auto Industry Volume
Auto Industry Volume Domestic Sales 9MFY17 9MFY16 Y-o-Y FY16 FY15 Y-o-Y (Volume in „000) (Nos.) (Nos.) Growth (%) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 1,554 1,517 2.4% 2,025 1,877 7.9% UVs 690 549 25.7% 764 723 5.7% Commercial Vehicles (CVs) M&HCVs 204 208 (1.9%) 3
Slide 13: Automobile Finance Market: 5 years Projected Growth @16-18%
Automobile Finance Market: 5 years Projected Growth @16-18% Growth in New Vehicle Finance Disbursements 5 year CAGR (% growth YoY) FY12E FY13E FY14E FY15E FY16E FY17E (FY21P) Cars 8% (7%) (6%) 3% 17% 12% 15% - 17% Utility Vehicles 16% 39% (6%) 1% 16% 32% 20% - 22% Commercial Vehicles 17% (14%) (24%)
Slide 14: Housing Finance Growth
Housing Finance Growth Growth in Housing Finance Disbursements (Rs.bn) Growth in disbursements to be supported by rising focus of developers on the affordable housing segment Tier II and III cities to drive growth 120% 114% Mortgage Penetration (as % of GDP) 100% 80% 68% 75% Though India‟s mor
Slide 15: 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 15
Slide 16: 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 17: Extensive Branch Network
Extensive Branch Network Extensive branch network with presence in 27 states and 4 union territories in India through 1181 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 11 HP 35 28 1167 1181 PB UC 19 1108 30 HR Delhi Sikkim 18 RAJ
Slide 18: 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 19: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Nine months ended Nine months ended Year ended Asset Class December – 16 December – 15 March – 16 Auto/ Utility vehicles 28% 31% 30% Tractors 20% 16% 15% Cars 23% 23% 22% Commercial vehicles and Construction equipments 11% 10% 11% Pre-owned vehicles 12%
Slide 20: Break up of AUM
Break up of AUM As on As on As on Asset Class December – 16 December – 15 March – 16 Auto/ Utility vehicles 31% 31% 31% Tractors 18% 17% 17% Cars 24% 24% 24% Commercial vehicles and Construction equipments 13% 12% 12% Pre-owned vehicles 9% 10% 10% Others* 5% 6% 6% 1. Approximate percentages 2. As on
Slide 21: 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 AAA (ind) Stable Short term debt IND A1+ -- CARE Ratings Outlook Long term and Subordinated debt AAA Stable
Slide 22: 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’ 16) Funding Mix by type of Instrument (Dec’ 16) Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share NCDs 144,599 42% Mut
Slide 23: 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 24: 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 24 24
Slide 25: Key Financials
Key Financials Figures on standalone basis Total Income Profit after Tax Value of Asset Financed Q3 FY 17 Rs 15,035 mn Rs -156 mn Rs 91,755 mn 7% 123% 15% Q3 FY 16 Rs 14,087 mn Rs 672 mn Rs 79,728 mn 9M FY 17 Rs 43,948 mn Rs 1,662 mn Rs 232,828 mn 4% 45% 17% 9M FY 16 Rs 42,154 mn Rs 3,023 mn Rs 198,
Slide 26: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) 418.74 366.58 365.59 329.30 59.05 296.17 55.85 49.53 42.15 43.95 FY14 FY15 FY16 9MFY16 9MFY17 FY14 FY15 FY16 9MFY16 9MFY17 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) 8.87 8.32 6.73 109.7 107.0 105.2
Slide 27: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 3.2% 46.5% 2.5% 36.1% 37.3% 1.8% 33.0% 32.6% 1.1% 0.9% FY14 FY15 FY16 9MFY16 9MFY17 FY14 FY15 FY16 9MFY16 9MFY17 Return on Net Worth (RONW) (*) (%) Asset Quality Gross NPA Net NPA 11.1% 10.1
Slide 28: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in Million) Q3FY17 Q2FY17 Q-o-Q Q3FY16 Y-o-Y FY16 Revenue from operations 15,101 14,464 4.4% 13,879 8.8% 56,468 Securitisation Income (net) (197) 452 (143.5%) 123 (259.9%) 2,064 Less: Finance cost 7,441 7,086 5.0% 6,696 11.1% 26,393 NII 7,463 7,830 (
Slide 29: Standalone Profit & Loss Account
Standalone Profit & Loss Account Nine months ended Nine months ended Year ended Particulars (Rs. in Million) Dec – 16 Dec – 15 March - 16 Revenue from operations 43,485 41,811 58,532 Other income 464 343 519 Total Revenue 43,948 42,154 59,051 Expenses: Employee benefits expense 5,012 4,032 5,588 Fin
Slide 30: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Dec 31, 2016 As on Dec 31, 2015 As on Mar 31, 2016 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,130 1,128 1,129 b) Reserves and Surplus 61,270 58,718 59,752 Shareholders' funds 62,400 59,846 60,881 Non-current liabilities a
Slide 31: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in Million) As on Dec 31, 2016 As on Dec 31, 2015 As on Mar 31, 2016 ASSETS Non-current assets a) Fixed Assets 1,151 1,107 1,135 b) Non-current investments 11,291 9,396 9,923 c) Deferred tax assets (Net) 6,363 4,586 5,853 d) Long-term loans and adva
Slide 32: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Nine months ended Nine months ended Year ended Particulars (Rs. in Million) Dec – 16 Dec – 15 March - 16 Revenue from operations 50,231 46,673 65,539 Other income 450 254 436 Total Revenue 50,681 46,927 65,975 Expenses: Employee benefits expense 6,458 5,022 7,041 F
Slide 33: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in Million) As on Dec 31, 2016 As on Dec 31, 2015 As on Mar 31, 2016 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,130 1,129 1,129 b) Reserves and Surplus 65,791 62,126 63,565 Shareholders' funds 66,921 63,255 64,694 Minority Interest 758 5
Slide 34: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in Million) As on Dec 31, 2016 As on Dec 31, 2015 As on Mar 31, 2016 ASSETS Non-current assets a) Fixed Assets 1,359 1,227 1,291 b) Non-current investments 7,482 6,530 6,522 c) Deferred tax assets (Net) 6,540 4,688 5,992 d) Long-term loans and adv
Slide 35: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Nine months ended Nine months ended Year ended Particulars (Rs. in Million) Dec – 16 Dec – 15 March - 16 RONW (Avg. Net Worth) 3.6% 6.9% 11.4% Debt / Equity 5.36:1 4.83:1 4.84:1 Capital Adequacy 17.9% 17.8% 17.3% Tier I 13.3% 15.0% 14.6% Tier II 4.6%
Slide 36: Spread Analysis
Spread Analysis Figures on standalone basis Nine months ended Nine months ended Year ended Particulars (Rs. in Million) Dec – 16 Dec – 15 March - 16 Total Income / Average Assets 14.5% 15.8% 16.3% Interest / Average Assets 7.1% 7.4% 7.3% Gross Spread 7.4% 8.4% 9.0% Overheads / Average Assets 3.5% 3.
Slide 37: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. in Million) As on Dec 31, 2016 As on Dec 31, 2015 As on Mar 31, 2016 Gross Non - Performing Assets* 50,589 39,851 32,242 Less: NPA Provisions 28,515 22,836 19,891 Net Non – Performing Assets 22,074 17,016 12,351 Total Assets (Incl. NPA Provis
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 38 38
Slide 39: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Nine Month ended Nine Month ended Year ended Particulars (Rs. million) December – 16 December – 15 March – 16 Loans disbursed 13,212 10,220 15,525 No. of Customer Contracts (Nos) 99,851 77,483 125,074 Outstanding loan book 42,311 28,584 32,645 Total income 4,83
Slide 40: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Nine Month ended Nine Month ended Year ended Particulars (Rs. million) December – 16 December – 15 March – 16 Total income 1,206 1,033 1,492 Net premium 8,858 7,200 10,870 PBT 521 503 752 PAT 337 326 485 No. of Policies for the Period (nos.) 1,120,878 960,181 1,330
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 41 41
Slide 42: Awards and Accolades
Awards and Accolades ■ Great Place to Work Institute in association with Economic Times has recognized Mahindra & Mahindra Financial Services Ltd. as one of INDIA‟S BEST COMPANIES TO WORK FOR , 2016 ■ Mahindra Finance has been appraised and rated at People CMM® Maturity Level 3 ■ Mahindra Finance in
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 43 43
Slide 44: Conservative Risk Management Policies
Conservative Risk Management Policies Provisioning Norms *Note 1: Duration (months) RBI Norms Duration (months) MMFSL The Company, wef. quarter ended 30th June 2016, has started considering the estimated realisable value of underlying security (which conforms to the RBI norms) for loan assets 5 and
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 46 46
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