Aavas Financiers Ltd. · NSE:AAVAS
Aavas Financiers — Investor Day (May 2023)
45 slides from Aavas Financiers's investor day presentation, May 24, 2023
Slide 1: Regulation 30 disclosure letter to stock exchanges
Ref. No. AAVAS/SEC/2023-24/256 Date: May 24, 2023 To, To, The National Stock Exchange of India Limited BSE Limited Exchange Plaza, C-1, Block G, Phiroze Jeejeebhoy Towers, Bandra Kurla Complex, Dalal Street, Mumbai – 400051 Mumbai – 400001 Scrip Symbol: AAVAS Scrip Code: 541988 Dear Sir/Madam, Sub:
Slide 2: Investor & Analyst Day Presentation May 2023
Investor & Analyst Day Presentation May 2023
Slide 3: Safe Harbor
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by Aavas Financiers Ltd. (the “Company”), without any specific objectives and solely for information purposes and do not constitute directly or indirectly any advertisement, advise, offer, recomm
Slide 4: Speakers for the Day
Speakers for the Day Nishant Sharma Manas Tandon Promoter Nominee Director Promoter Nominee Director 20+ years of experience 20+ years of experience Kedaara Capital Partners Group Sachinder Bhinder Ghanshyam Rawat Ashutosh Atre Managing Director & CEO President & CFO President & Chief Risk Officer 2
Slide 5: Agenda
Agenda Aavas 3.0 Financial Capital Business and Growth Risk, Underwriting & Collections Cultural DNA, People and ESG Technology Analytics 4
Slide 6: Speakers for the Day
Speakers for the Day Nishant Sharma Manas Tandon Promoter Nominee Director Promoter Nominee Director 20+ years of experience 20+ years of experience Kedaara Capital Partners Group Sachinder Bhinder Ghanshyam Rawat Ashutosh Atre Managing Director & CEO President & CFO President & Chief Risk Officer 2
Slide 7: Aavas 3.0
Aavas 3.0 6
Slide 8: Aavas 3.0: Building a Lasting Institution
Aavas 3.0: Building a Lasting Institution Aavas 1.0 Aavas 2.0 Aavas 3.0 2012 2016 2023 AUM (INR Bn) Investment (2016) by: IPO (October 2018) 113.5 141.7 59.4 78.0 94.5 0.0 1.2 4.1 8.4 16.8 26.9 40.7 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY28E # of 25 35 42 44 94 165 210 250 280
Slide 9: Focus Areas
Focus Areas 1. Priorities – Governance, Asset Quality, Profitability, Growth 2. Pillars – Risk, Financial Capital, Human Capital, Technology 3. Vectors of Growth – Product Diversification and Deeper Geographic Penetration 4. Technology – Enabling Sustainable Growth, Operating Leverage and Superior C
Slide 10: Focus Areas
Focus Areas 1. Priorities – Governance, Asset Quality, Profitability, Growth 2. Pillars – Risk, Financial Capital, Human Capital, Technology 3. Vectors of Growth – Product Diversification and Deeper Geographic Penetration 4. Technology – Enabling Sustainable Growth, Operating Leverage and Superior C
Slide 11: Focus Areas
Focus Areas 1. Priorities – Governance, Asset Quality, Profitability, Growth 2. Pillars – Risk, Financial Capital, Human Capital, Technology 3. Vectors of Growth – Product Diversification and Deeper Geographic Penetration 4. Technology – Enabling Sustainable Growth, Operating Leverage and Superior C
Slide 12: Focus Areas
Focus Areas 1. Priorities – Governance, Asset Quality, Profitability, Growth 2. Pillars – Risk, Financial Capital, Human Capital, Technology 3. Vectors of Growth – Product Diversification and Deeper Geographic Penetration 4. Technology – Enabling Sustainable Growth, Operating Leverage and Superior C
Slide 13: Focus Areas
Focus Areas 1. Priorities – Governance, Asset Quality, Profitability, Growth 2. Pillars – Risk, Financial Capital, Human Capital, Technology 3. Vectors of Growth – Product Diversification and Deeper Geographic Penetration 4. Technology – Enabling Sustainable Growth, Operating Leverage and Superior C
Slide 14: Financial Capital
Financial Capital \ 13
Slide 15: Strong Liability Base
Strong Liability Base Diversified Funding Mix 31 Lenders 12.2% Term Loan 10.0% Term Loan Diversified Mix 35.0% Assignment No exposure to Commercial Papers Assignment 20.0% 20.8% 45.0% Mar-23 Future NHB Refinancing NHB Refinancing Incremental Borrowings - NCDs 17.0% Q4 FY23 - INR 15,816 Mn at 8.07% 2
Slide 16: Focused from Day 1 on matching Assets to Liabilities
Focused from Day 1 on matching Assets to Liabilities Surplus Management* (INR Mn) (As on Mar-23) Loan Assets & Borrowings (INR Mn) (As on Mar-23) <3months 18,762 14,610 4,151 84,566 89,526 24,237 <6months 16,363 7,874 57,101 40% 35,683 37% 33,644 <1year 16,747 16,458 16,897 Loan Assets Borrowings 69
Slide 17: Steady Credit Ratings Upgrades over the Years
Steady Credit Ratings Upgrades over the Years CARE Mar-23 AA / Stable Short-term A1+ rating reaffirmed by ICRA, CARE, & India Ratings Mar-17 A+ /Stable ICRA Mar-23 AA / Stable AA AA- Mar-16 A / Stable A+ A A- BBB+ FY13 FY14 FY16 FY17 FY20 FY23 16
Slide 18: Consistently Maintained 5%+ Spread over the Last 8 Years
Consistently Maintained 5%+ Spread over the Last 8 Years Yields, Cost of Borrowings and Spreads (%) Strong track record of self funding growth Yields (%) COB (%) Spreads (%) Total CAR INR cr. Period Up to FY16 Up to FY23 Difference 27.5% 46.7% 61.6% 67.8% 55.9% 54.4% 51.9% 46.9% Total Share Capital
Slide 19: Business and Growth
Business and Growth \ 18
Slide 20: Affordable Housing is a Secular Growth Story Backed by Long Term Structural Tailwinds
Affordable Housing is a Secular Growth Story Backed by Long Term Structural Tailwinds The Affordable Housing Loan segment has a large headroom to grow Affordable HFCs expected to gain market share Affordable Housing Loan Market Size (USD Bn) Affordable HFCs Housing AUM (USD Bn) 70 10 53 4 5 6 44 47
Slide 21: Contiguous Geographic Expansion Strategy
Contiguous Geographic Expansion Strategy Calibrated expansion strategy with a network of 346 branches FY13 FY16 FY18 FY21 FY23 FY18-23 CAGR Branch presence 25 44 165 280 346 16% 141 95 1 17 41 28% AUM (INR Bn) # states 4 6 8 11 13 present in % AUM Contribution of 90%+ 49% 46% 40% 38% largest state F
Slide 22: Deep Penetration Model ensures Large Headroom for Growth in Core States
Deep Penetration Model ensures Large Headroom for Growth in Core States All states with vintage of 5 years+, continue to deliver consistent growth with superior asset quality Rajasthan Maharashtra Gujarat Madhya Pradesh Delhi Year of entry 2012 2012 2012 2013 2013 Branches at the end 102 48 44 49 4
Slide 23: Diversified Sourcing & Expanding Business
Diversified Sourcing & Expanding Business Leads Conventional Non-Conventional Ability to cater across segments while focusing on Small-Ticket Affordable Nirman: 890k Digital: 500k Sampark: 2k Housing segment ATL: 120k Mitra: 46k Saathi: 18k BTL: 400k Website: 85k Aavas+: 56k HIG & 1 cr. 9.5% affluen
Slide 24: Risk, Underwriting & Collections
Risk, Underwriting & Collections 23
Slide 25: Robust Risk Ecosystem
Robust Risk Ecosystem In-house team of 97 Credit Risk ALM Risk Legal (incl. 70 lawyers) + 390 empaneled Law Firms Concentration Risk Interest Rate Risk In-house team of 177 170 (incl. qualified civil engineers) + Technical 170 empaneled valuer firms Legal Risk Reputation Risk 99.97% properties Geo-t
Slide 26: Continuing Traditional Credit Practices by Leveraging Technology
Continuing Traditional Credit Practices by Leveraging Technology 600+ Strong credit team 80% of Senior Credit team is home-grown 150+ Qualified CAs 5Y+ Senior credit team's vintage Customised credit assessment with templates 100% of SENP customers are met by the credit Credit To continue with our co
Slide 27: Superior in-house Processes leading to Pristine Asset Quality
Superior in-house Processes leading to Pristine Asset Quality Behaviour of cases disbursed in last 2 financial year (FY21 – FY23) Testimony of Underwriting Performance 900 0.66% 0.66% 0.16% 0.12% INR cr. 22,000 87k 140 800 7,745 Life time write-off / Life- 120 571 700 time disbursal: 0.11% 100 600 8
Slide 28: Collections supported by Technology, Data & Analytics
Collections supported by Technology, Data & Analytics Technology & Analytics powering collection capabilities Bounce Prediction Geo-allocation Real Time Field Force Tracking NPA Prediction Modelling Focus on technology with continuous process improvements delivering sustained gains All digital chann
Slide 29: Cultural DNA, People and ESG
Cultural DNA, People and ESG 28
Slide 30: Aavas DNA
Aavas DNA Drive for Result Sensitivity Customer centricity Nurturing Integrity Talent 29
Slide 31: Strong Middle Layer across Core Business Functions
Strong Middle Layer across Core Business Functions Business Origination Credit & Risk Collections 100 137 54 Strong middle 6 15 79 7 37 93 6 10 38 layer National Zonal Regional National Zonal Regional National Zonal Regional management 43% employees with 3+ 70% employees with 3+ 78% employees with 3
Slide 32: Initiatives to Upskill Mid-Layer Management that can drive High Impact Projects
Initiatives to Upskill Mid-Layer Management that can drive High Impact Projects Leadership programs with B-Schools Application oriented impact projects Utkarsh: Positive Paradigm Shift In Customer Experience IIM-Ahmedabad IIM-Calcutta Chetan: Leadership Development Reducing Bouncing Rate & Impacting
Slide 33: Team Aavas – Employee Engagement
Team Aavas – Employee Engagement PROJECT PRERNA ICON AWARDS STRATEGY MEET KHELOUTSAV WOMEN FACILITATION CYCLOTHON 32
Slide 34: Environmental, Social & Governance
Environmental, Social & Governance Pillars for Sustainable Future Recent Initiatives ESG Vision & Roadmap: ▪ Onboarded PWC for: ▪ Assessment and defining the ESG Vision & Roadmap ▪ Defining ESG Targets & Its Materiality Mapping ▪ Alignment with UN SDGs Nurturing Responsible Green Planet ▪ Navigating
Slide 35: Pioneer in Self-Built Green Housing
Pioneer in Self-Built Green Housing ▪ In 2021, IFC conducted a survey of 500 Aavas homes to understand the willingness and perceptions towards green homes, leading to affordable green home financing solutions – designed and implemented by Aavas ▪ 11,000+ Aavas customers have shown interest and agree
Slide 36: CSR Activities – Engage-Enable-Enrich
CSR Activities – Engage-Enable-Enrich PROJECT VISHWAKARMA GRAM SIDDHI KHELODAY AAVAS AAHAAR ROAD SAFETY AWARENESS WOMEN SPORTS ACADEMY 35
Slide 37: Technology
Technology \ 36
Slide 38: Evolution of Technological Initiatives driving Outcomes
Evolution of Technological Initiatives driving Outcomes Guiding Principles 1 2 3 Be a Enable Sustainable Growth with Create a Superior Customer “Bank by Technology” Capabilities Significant Operating Leverage Experience Create ‘Robust’ and ‘scalable’ Be more ‘efficient’ by optimizing Tune systems, p
Slide 39: Key Transformation Initiatives
Key Transformation Initiatives LOS LMS Enterprise GL In process of implementing a new Adopting a new loan Adopting a next-gen cloud ERP system digital loan origination platform management solution (LMS) to for back-office process automations to (LOS) and customer service system enable scalability. e
Slide 40: User Friendly Applications backed by Innovations
User Friendly Applications backed by Innovations Customer App Nirman Productivity App Aavas Mitra: Partner App Technical Valuation App Salesforce App 4.4 4.5 4.3 4.2 80% 75% 62% 95% 90% Customer services Part disbursals Customers using app Collections taking Login fee Collections moved to digital mo
Slide 41: Analytics
Analytics \ 40
Slide 42: Data and Analytics across Customer Lifecycle
Data and Analytics across Customer Lifecycle Sourcing Underwriting Risk Collections Retention Productivity Balance Transfer Market Analytics Risk Datamarts Bounce Analytics Analytics Analysis Descriptive Pricing Analytics Balanced Balanced Analytics Risk Analytics Scorecard Scorecard Campaign Analyt
Slide 43: Predictive Use Cases
Predictive Use Cases APPLICATION SCORE LOGISTIC REGRESSION BASED PREDICTIVE MODEL A model that predicts future performance of applications being processed. Custom model built for Aavas, tested on past data, off-us and on-us, rank orders leading & lagging indicators Increase approval and Optimize TAT
Slide 44: Optimization Use Cases
Optimization Use Cases GEO LOCATION BASED OPTIMIZATION Manual Allocation Optimized Allocation Geo Location based effort Optimization Can be used for Collections, Sales, Credit Reduction in efforts Clustering Optimization COLLECTIONS BOUNCE PREDICTION Bounce Model Prediction vs. Actual Bounce Risk Se
Slide 45: Thank You !
Contact Us Aavas Financiers Limited CIN: L65922RJ2011PLC034297 Mr. Ghanshyam Gupta investorrelations@aavas.in www.aavas.in Thank You ! 44