Arman Financial Services Limited · NSE:ARMANFIN

Arman Financial Services — H1 FY2024 Earnings Presentation

41 slides from Arman Financial Services's earnings presentation, November 2023

  1. Slide 1: Arman Financial Services Limited Investor Presentation – November 2023

    ` Arman Financial Services Limited Investor Presentation – November 2023

  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: H1FY24 Performance Highlights

    H1FY24 Performance Highlights Assets Under INR 2,304 Crore Provisions and INR 24 Crore Management write offs Cumulative Provisions stood at ~INR 77.1 Crore (+60% Y-o-Y) (covering 3.34% of the consolidated AUM, 4.01% on -book) INR 1,075 Crore GNPA: 2.48% Disbursement Asset Quality (+63% Y-o-Y) NNPA:

  6. Slide 6: Recent Fund Raise – September 2022 (1/2)

    Recent Fund Raise – September 2022 (1/2) Company raised INR 115 crore via allotment of CCDs and OCRPS on a preferential basis • Allotment of 6,24,388 Unsecured Compulsorily Convertible Shareholding Pattern - Shareholding Pattern - Debentures (“CCDs”) on preferential basis to Investors Pre-Capital Ra

  7. Slide 7: Recent Fund Raise – September 2022 (2/2)

    Recent Fund Raise – September 2022 (2/2) Net worth (INR Crore) Particulars 31-Mar-23 Fund Raised on Converted on Outstading Calculated as per IND-AS 502 Particulars 406 30-Sep-22 30-Sep-23 30-Sep-23 365 Equity Share Capital INR 365 Crore CCDs (Nos) 6,24,388 65,040 5,59,348 213 CCDs (Amount in Crs) 7

  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) H1FY24 H1FY23 Branches 11.9% Microfinance 309 253 2 27.1% 15 10.5% MSME 71 56 75 53 11.3% 2W & Rural 2W 5 6 33 67 9 24.4% 84 14.8% Total 385 315 41 Gujarat Uttar Pradesh 6 Madhya Pradesh Rajasthan Maharashtra Others Number of Branc

  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%* 2%* Microfinance - JLG MSME Loans Two-Wheeler Loans Individual Business Loans Average Ticket Size : INR 46,000 Average Ticket Size: Average Ticket Size: Average Ticket Size: (Cycle 1 & 2 -INR 20k - 50k 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) 1,945 909 247 66 45,000 46,000 1,190 540 129 22 H1FY23 H1FY24 H1FY23 H1FY24 H1FY23 H1FY24 H1FY23 H1FY24 H1FY23 H1FY24 *Includes Individual Business Loans • JLG model with small ticket loans (Avg. Ti

  19. Slide 19: MSME Loans

    MSME Loans (INR Crore) AUM Disbursement Total Income Avg. Ticket Size (INR) 291 134 49 80,000 74,000 197 96 34 H1FY23 H1FY24 H1FY23 H1FY24 H1FY23 H1FY24 H1FY23 H1FY24 • Individual enterprise /working capital loans for small rural businesses in low competition • Disbursement: 100% Cashless areas • Cr

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

    2W and Rural 2W Loans (INR Crore) AUM Disbursement Total Income Avg. Ticket Size (INR) 69 31 9 67,000 71,000 7 49 21 H1FY23 H1FY24 H1FY23 H1FY24 H1FY23 H1FY24 H1FY23 H1FY24 • Hypothecation (secured) loans given to self-employed /cash-salaried customer in the • Disbursement: 100% Cashless informal se

  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 98.0% 98.4% 98.3% 98.7% 98.5% 98.6% 96.8% 96.4% 96.3% 98.1% 98.4% 98.3% Jul-23 Aug-23 Sep-23 Jul-23 Aug-23 Sep-23 Jul-23 Aug-23 Sep-23 Jul-23 Aug-23 Sep-23 Update on Collections Two- Particulars (INR Crore) Microfinance MSME Total Wheeler • 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) 48.8% 22 22 19 19 19 17 17 17 17 35.2% 16 32.6% 29.0% 25.6% 25.8% 20.3% 18.7% 31-Mar-21 31-Mar-22 31-Mar-23 30-Sep-23 Q2 FY 2 3 Q3 FY 2 3 Q4 FY 2 3 Q1 FY 2 4 Q2FY24 Arman (Standalone) Namra Av g T e n u r

  25. Slide 25: Borrowing Profile

    Borrowing Profile Borrowing Mix (%) Top 5 Lending Partners (INR Crore) 1,368 1,518 1,888 2,161 2,245 Top 5 Lenders % of Borrowings Lender 1 - TL & DA 13.7% 27.0% 29.3% 33.0% 33.9% 32.3% Lender 2 - TL, PTC & DA 8.2% 3.2% 1.9% Lender 3 - TL&DA 7.5% 2.0% 1.4% 1.3% Lender 4 - TL, PTC & DA 5.1% 24.4% 24.

  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: H1 FY24 Consolidated Profit & Loss Statement

    H1 FY24 Consolidated Profit & Loss Statement Particulars (INR Crore) Q2 FY24 Q2 FY23 Y-o-Y (%) Q1 FY24 Q-o-Q (%) H1 FY24 H1 FY23 Y-o-Y (%) Income from Operations 160.3 92.6 149.5 309.8 171.6 Other Income 0.0 0.0 0.0 0.0 0.0 Gross Total Income 160.3 92.6 73% 149.5 7% 309.8 171.6 81% Finance Costs 67.

  29. Slide 29: Balance Sheet as on Sept 2023

    Balance Sheet as on Sept 2023 Particulars (INR Crore) Consolidated Standalone Particulars (INR Crore) Consolidated Standalone ASSETS Sep-23 Mar-23 Sep-23 Mar-23 LIABILITIES & EQUITY Sep-23 Mar-23 Sep-23 Mar-23 Financial Assets Equity Share capital 8.7 8.5 8.7 8.5 Cash and cash equivalents 140.6 26.2

  30. Slide 30: Consolidated Business Performance

    Consolidated Business Performance (INR Crore) AUM Disbursement Gross Total Income 2,304 631 160 2,143 149 150 1,943 537 537 1,642 478 1,436 103 93 278 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Net Total Income Pre-provision Operating Pro

  31. Slide 31: Consolidated Business Performance

    Consolidated Business Performance Net Interest Margin (%) Cost to Income Ratio (%) Yield (%) 15.0% 35.6% 34.6% 28.3% 14.2% 14.1% 26.0% 25.9% 26.2% 13.4% 12.4% 23.9% 27.0% 26.0% 25.4% Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Asset Qualit

  32. Slide 32: PAR Movement

    PAR Movement PAR 31-90 (%) Movement GNPA (%) 8.3% 7.9% 7.8% 6.0% 6.9% 5.4% 3.0% 3.7% 4.1% 3.7% 2.4% 0.9% 2.4% 2.8% 2.5% 0.5% 5.0% 4.8% Mar-20 Mar-21 Mar-22 Mar-23 Sep-23 4.6% 4.3% 4.5% 3.9% 4.7% NNPA (%) 2.1% 1.9% 1.4% 2.1% 1.6% 1.4% 1.1% 1.3% 1.1% 1.1% 0.9% 0.6% 0.6% 0.3% 0.3% 0.6% 0.5% 0.5% Mar-20

  33. Slide 33: H1 FY24 – Standalone P&L Statement (2W & MSME)

    H1 FY24 – Standalone P&L Statement (2W & MSME) Particulars (INR Crore) Q2 FY24 Q2 FY23 Y-o-Y (%) Q1 FY24 Q-o-Q (%) H1 FY24 H1 FY23 Y-o-Y (%) • Standalone AUM grew by 46% Y-o-Y to INR 359 Crore as compared to INR 246 Crore Income from Operations 33.8 21.6 29.4 63.2 43.1 • Disbursement growth of 41% Y

  34. Slide 34: Standalone Business Performance

    Standalone Business Performance (INR Crore) AUM Disbursement Gross Total Income* 343 359 95 315 14 84 81 66 69 275 69 30 246 61 17 14 27 28 58 55 4 49 19 21 4 4 20 12 3 291 81 4 255 276 67 67 197 217 23 24 26 43 50 16 18 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3

  35. Slide 35: H1 FY24 – Namra Finance Profit & Loss Statement

    H1 FY24 – Namra Finance Profit & Loss Statement Particulars (INR Crore) Q2 FY24 Q2 FY23 Y-o-Y (%) Q1 FY24 Q-o-Q (%) H1 FY24 H1 FY23 Y-o-Y (%) • The microfinance industry has exhibited remarkable strength in the face of prevailing volatility and geopolitical Income from Operations 126.6 71.2 120.3 24

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

    Microfinance Business Performance – Namra Finance (1/2) (INR Crore) AUM Disbursement Gross Total Income 1,945 536 122 127 1,801 120 1,628 453 456 409 1,367 1,190 81 71 223 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Net Total Income Pre-pr

  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 (%) 14.8% 33.9% 13.3% 32.2% 12.7% 12.5% 27.0% 12.0% 24.4% 25.3% 23.2% 22.9% 23.1% 21.9% 21.5% Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q2FY23 Q3FY23 Q4FY23 Q1FY

  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% 10% 82% 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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