Arman Financial Services Limited · NSE:ARMANFIN
Arman Financial Services — Q3 FY21 Earnings Presentation
38 slides from Arman Financial Services's earnings presentation, Feb 16, 2021
Slide 1: Exchange filing cover letter
Date: February 16, 2021 To, To, BSE Limited National Stock Exchange of India Limited P. J. Tower, “Exchange Plaza” C-1, Block G, Dalal Street, Bandra Kurla Complex, Mumbai–400001 Bandra, Mumbai- 400051 Script Code: 531179 Symbol: ARMANFIN ISIN: INE109C01017 Series: EQ Dear Sir, SUB: PRESENTATION ON
Slide 2: Arman Financial Services Ltd. Q3 FY21 Investor Presentation
INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Q3 FY21 - Investor Presentation February 2021
Slide 3: Disclaimer
DISCLAIMER Certain statements in this document that are not historical facts are forward looking statements. Such forward-looking statements are subject to certain risks and uncertainties like government actions, local, political or economic developments, technological risks, and many other factors
Slide 4: Contents
CONTENTS 04 Performance Update – Q3 FY21 & 9MFY21 13 Liability Overview 16 Company Overview 24 Product Overview 28 Annexures
Slide 5: Financial Performance Update – Q3 & 9MFY21
Financial Performance Update – Q3 & 9MFY21
Slide 6: Q3 & 9M FY21 – Financial Performance Highlights
Q3 & 9M FY21 – Financial Performance Highlights ✓ Total AUM declined by 13% YoY to INR 7,200 Mn (Q3 FY21 AUM: INR 8,238 Mn) Shareholders Equity Stood at INR 1,843 Mn in Q3 FY21 ✓ Consolidated Debt-Equity Ratio stood at 3.1x on 31 December’20 (exclude direct assignment) ✓ Pre-Provisioning Operating P
Slide 7: Update on Collections
Update on Collections Update on Collections ❑ Collections have improved significantly across all 3 segments since September 2020 to reach ~93% in January 2021. (details given in the table below) • ‘Microfinance’ collections picked-up strongly as the repayment rates reached 84% in September 2020, and
Slide 8: Update on Liquidity & Disbursements
Update on Liquidity & Disbursements Update on Liquidity ❑ Healthy Liquidity position with INR ~1,264 Mn in cash/bank balance, liquid investments, and undrawn CC limits ❑ Successfully raised INR 640 Mn since September 2020 ❑ Liquidity position has improved driven by the pick-up in collections and the
Slide 9: Q3 & 9M FY21 – Consolidated Profit & Loss Statement
Q3 & 9M FY21 – Consolidated Profit & Loss Statement Particulars (INR Mn) Q3 FY21 Q3 FY20 YoY (%) 9MFY21 9MFY20 YoY (%) Assets Under Management (AUM) 7,200 8,238 (13%) 7,200 8,238 (13%) Disbursements 1,819 2,258 (19%) 2,345 6,488 (64%) Shareholder’s Equity * 1,842 1,256 47% 1,842 1,256 47% Income fro
Slide 10: Q3 & 9M FY21 – Consolidated Balance Sheet
Q3 & 9M FY21 – Consolidated Balance Sheet Particulars (in INR Mn) Consolidated Standalone Consolidated Standalone ASSETS Dec 2020 March 2020 Dec 2020 March 2020 LIABILITIES & EQUITY Dec 2020 March 2020 Dec 2020 March 2020 Financial Assets Equity Share capital 85 85 85 85 Cash and cash equivalents 37
Slide 11: Q3 FY21 – Microfinance “Namra” Performance Update
Q3 FY21 – Microfinance “Namra” Performance Update ❖ Q3FY21 witnessed the reversal of de-growth in microfinance AUM. Particulars (INR Mn) Q3 FY21 Q3 FY20 YoY (%) 9MFY21 9MFY20 YoY (%) • The Portfolio has grown from the low of INR 5,230 Mn in Sep’20 to INR 5,487 Mn in Q3FY21. Asset Under Management 5,
Slide 12: Q3 FY21 - Microfinance Performance Update
Q3 FY21 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 6,215 6,051 395 390 5,888 1,802 5,487 356 5,230 1,605 333 332 1,473 386 0 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3FY21 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 * Q3 FY21 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21
Slide 13: Q3 FY21 – Microfinance Performance Update
Q3 FY21 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 26.0% 25.6% 24.7% 23.1% 52.9% 21.6% 43.9% 42.1% 40.9% 36.9% 16.0% 15.2% 13.3% 14.4% 10.5% Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Yields % NIM % Cost / Income (%) Asset Quality
Slide 14: Q3 FY21 – Standalone Performance Update (2W & MSME)
Q3 FY21 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q3 FY21 Q3 FY20 YoY (%) 9MFY21 9MFY20 YoY (%) ❖ Standalone AUM stood at INR 1,713 Mn on Dec’20 Asset Under Management 1,713 2,350 (27%) 1,713 2,350 (27%) • MSME AUM stood at INR 1,168 Mn Disbursements 345 653 (47%) 466 1,758 (7
Slide 15: Q3 FY21 - MSME Performance Update
Q3 FY21 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 117 118 1,433 363 1,330 1,357 333 1,188 1,169 108 107 240 102 55 0 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21* Q3 FY21 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Asset Quali
Slide 16: Q3 FY21 - 2W Performance Update
Q3 FY21 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 274 66 1,018 951 57 53 823 45 625 157 37 544 105 65 0 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q3 FY20 Q4 FY20 Q1 FY21 * Q2 FY21 Q3 FY21 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Asset Quality # Yields % 3
Slide 17: Liability Overview
nee ‘Liability Overview
Slide 18: Efficient Liability Management
Efficient Liability Management Funding profile is well diversified with increase in share of funds from NCDs & DFIs Q4 FY20 - Borrowing Mix % Q3 FY21 - Borrowing Mix % INR 7,665 Mn * INR 6,064 Mn # 2% Banks & SFBs 15% 26% DFIs (NABARD, MUDRA & SIDBI) 29% 6% 36% NBFC / FI 6% 7% Securitization 12% 29%
Slide 19: Lending partners
Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners NCDs & ECB 22 18
Slide 20: Company Overview
Company Overview
Slide 21: Key Strengths
Key Strengths Genesis Robust Risk Management Framework ▪ Arman Financial Services (“Arman”) is a diversified NBFC ▪ Superior Asset Quality – #GNPA: 0.7%/4.1%; NNPA: #0.0%/0.6% (Q3 FY21) focusing on large under-served rural & semi-urban retail markets ▪ Consistent rating upgrades backed by strong fin
Slide 22: Business Progression
Business Progression Company Disbursement Raised PE Expanded to Crosses 100 crosses 750 Cr; incorporated. funding from Maharashtra, branches across 5 100% Cashless Started bill Launched 2W Incofin; MP, UP & states & 3 products; disbursements; discounting & Loans Disbursement Uttarakhand; Disbursemen
Slide 23: Product Snapshot
Product Snapshot • 28 years of existence • Active customer base of 4.0 lakh • Employee strength of 1,660 employees • Completely in-house operations – Sourcing, Credit & Collections Microfinance MSME Loans 2-Wheeler Loans Rural 2W Loans % of Total AUM 74% 17% 8% 1% (in Pilot Stage) LTV Unsecured Cash
Slide 24: Differentiated Operations
Differentiated Operations 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 increase in volumes rather than ticket sizes KEY STRATEGIC DIFFERENTIATORS
Slide 25: Technological Initiatives to Strengthen Operations
Technological Initiatives to Strengthen Operations ❖ In FY19, the company launched an integrated mobile interface for its MFI field staff to enable seamless on-boarding of MFI customers by digitizing & standardizing the loan origination and appraisal process. ‘This technology has been successfully i
Slide 26: Strong Growth in AUM & Disbursements
Strong Growth in AUM & Disbursements….. Total AUM (INR Mn) 10000 • Diversified portfolio of 7,043 Mn in Q2 FY21 split between – 50% 10000 9000 • Microfinance: INR 5,230 Mn (74%), 8,599 8000 76%# • MSME Loans: INR 1,188 Mn (17%) 8000 6,847 17% 7000 14% • 2-Wheeler Loans: INR 625 Mn (9%) 11% • 6000 60
Slide 27: While Maintaining Superior Cost Efficiency & Asset Quality
…..While Maintaining Superior Cost Efficiency & Asset Quality Gross Income and Net Total Income (INR Mn) Yield % and NIM % Focus on risk have led to immaculateDemonetization through-cycle asset quality Demonetization CAGR: 49% CAGR: 47% 2,152 2.6% 2.6% * Demonetization 2.0% 28.7% 28.3% 27.4% 1,411 2
Slide 28: Shareholding Pattern
Shareholding Pattern SHAREHOLDING – 31st December 2020 Promoters, 27.5% Public, 50.3% SAIF Partners, 22.3% Source – Company ▪ *SAIF Partners invested INR 500 Mn in CCDs in April 2018 Post conversion of CCD’s, SAIF Partners stake in the company stands at 22.3% ▪ Mr. Mridul Arora, MD at SAIF Partners
Slide 29: Product Overview
MSME EOANS )S Product Overview
Slide 30: Product Overview: Microfinance
Product Overview: Microfinance Product Overview FY20 – Key Metrics (Mn) ▪ JLG model with small ticket loans (Avg. Ticket Size – INR 6,215 6,531 26,000) given to women borrowers for income generating activities such as Livestock, Dairy, Agri allied, Kirana Stores AUM (INR Mn) Disbursement (INR Mn) ▪
Slide 31: Product Overview: 2W & Rural 2W Loans
Product Overview: 2W & Rural 2W Loans Product Overview FY20 – Key Metrics (Mn) ▪ Hypothecation (secured) loans given to self-employed / cash- 951 843 salaried customer in the informal segment in semi-urban / rural areas for a 2W AUM (INR Mn) Disbursement (INR Mn) ▪ Currently operates only in Gujarat
Slide 32: Product Overview: MSME Loans
Product Overview: MSME Loans Product Overview MSME Process Overview ▪ Individual enterprise / working capital loans for small rural businesses in low competition areas • In-house sourcing team (No DSAs) ▪ Currently operates across 3 states – Gujarat, MP & Maharashtra, with 35 branches • Feet-on-Stre
Slide 33: Contact: Group CFO and Investor Relations
Vivek Modi Group – CFO Chintan Mehta Arman Financial Services Ltd Dickenson World Tel : + 91 79 4050 7000 (Extn. 210) Tel : +91 9892183389 Email : vivek@armanindia.com Email : armanfinancial@dickensonworld.com
Slide 34: Annexures
Ess to INCLUSION 1 = Annexures
Slide 35: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Disbursement growth is driven by customer & branch addition AUM growth exceeds MFI industry growth rates 3.0 Demonetization 900.0 CAGR: 57% 2.5 2.24 2.32 800.0 700.0 6,215 2.0 1.70 600.0 Demonetization 1.33 500.0 4,837 1.5 3,170 400.0 0.80 0.74 653 1.0 590 300.0 400
Slide 36: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency MFI AUM Mix (%) Demonetization 1% 1% 61% 7% 18% 21% 20% 56% 17% 18% 48% 13% 21% 43% 21% 40% 39% 21% 92% 27% 82% 25% 72% 44% 31% 27% FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20
Slide 37: 2W Loans: 5-Year Performance
2W Loans: 5-Year Performance Yields (%) & NIM (%) Trend Arman 2W AUM/ has seen steady growth over FY15-20 1200.0 CAGR: 14% 1000.0 35.0% 32.1% 30.4% 800.0 30.0% 25.7% 24.9% 23.9% 25.5% 25.0% 600.0 20.0% 1,017 951 900 20.4% 19.6% 400.0 738 18.4% 15.0% 14.8% 15.6% 16.5% 555 493 10.0% 200.0 5.0% 0.0% 0.
Slide 38: MSME Loans: 3-Year Performance
MSME Loans: 3-Year Performance Disbursement Growth AUM Growth 3500 CAGR: 61% 33000 CAGR: 76% 1,433 30000 3000 27000 24,586 2500 992 24000 21000 2000 18000 16,284 15000 1500 12000 9,756 461 1000 9000 1,362 1,054 6000 978 500 61 3000 527 0 64 0 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 Arman MSME disbur
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