Arman Financial Services Limited · NSE:ARMANFIN

Arman Financial Services — Q1 FY2024 Earnings Presentation

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

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

    Arman Financial ` Services Limited Investor Presentation – August 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: Q1FY24 Performance Highlights

    Q1FY24 Performance Highlights Assets Under INR 2,143 Crore Provisions and INR 13 Crore Management write offs Cumulative Provisions stood at INR 72 Crore (+54% Y-o-Y) (covering 3.4% of the consolidated AUM, 4.1% on -book) INR 537 Crore GNPA: 2.5% Disbursement Asset Quality (+42% Y-o-Y) NNPA: 0.1% Sha

  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) Fund Raised on Net worth (INR Crore) Particulars 31-Mar-23 Particulars 28-Sep-22 Calculated as per IND-AS 406 365 CCDs INR 76.8 Crore 213 Equity Share Capital INR 365 Crore 187 CCDs Outstanding 6,24,388 CCDs Total Shares 84,92,334 OCRPS INR 38.2 Crore Mar-21

  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) Q1FY24 Q1FY23 Branches 10.7% Microfinance 274 246 3 27.7% 15 10.8% MSME 64 56 67 47 11.2% 27 2W & Rural 2W 4 6 78 61 15.1% 24.5% Total 343 308 42 Gujarat Uttar Pradesh 3 Madhya Pradesh Rajasthan Maharashtra Others Number of Branche

  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 82%* 13%* 3%* 2%* Microfinance - JLG MSME Loans Two-Wheeler Loans Individual Business Loans Average Ticket Size : INR 45,000 Average Ticket Size: Average Ticket Size: Average Ticket Size: (Cycle 1 & 2 -INR 20k - 50k INR 75,000 INR 70,000 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) 1,801 453 120 33 45,000 37,000 1,159 317 58 10 Q1FY23 Q1FY24 Q1FY23 Q1FY24 Q1FY23 Q1FY24 Q1FY23 Q1FY24 Q1FY23 Q1FY24 *Includes Individual Business Loans • JLG model with small ticket loans (Avg. Tic

  19. Slide 19: MSME Loans

    MSME Loans (INR Crore) AUM Disbursement Total Income Avg. Ticket Size (INR) 276 67 24 75,000 53 182 16 57,000 Q1FY23 Q1FY24 Q1FY23 Q1FY24 Q1FY23 Q1FY24 Q1FY23 Q1FY24 • Individual enterprise /working capital loans for small rural businesses in low competition • Disbursement: 100% Cashless areas • Cre

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

    2W and Rural 2W Loans (INR Crore) AUM Disbursement Total Income Avg. Ticket Size (INR) 66 17 5 5 67,000 60,000 47 9 Q1FY23 Q1FY24 Q1FY23 Q1FY24 Q1FY23 Q1FY24 Q1FY3 Q1FY24 • Hypothecation (secured) loans given to self-employed /cash-salaried customer in the • Disbursement: 100% Cashless informal segm

  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 98.3% 98.2% 98.2% 98.1% 98.3% 98.1% 96.5% 96.6% 96.6% 98.3% 98.2% 98.1% Apr-23 May-23 Jun-23 Apr-23 May-23 Jun-23 Apr-23 May-23 Jun-23 Apr-23 May-23 Jun-23 Update on Collections Two Particulars (INR Crore) Microfinance MSME Total Wheeler • Co

  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 22 19 19 17 17 17 17 17 32.6% 31.6% 29.0% 25.6% 26.3% 20.3% 18.7% 31-Mar-21 31-Mar-22 31-Mar-23 30-Jun-23 Q1 FY 2 3 Q2 FY 2 3 Q3 FY 2 3 Q4 FY 2 3 Q1 FY 2 4 Arman (Standalone) Namra Av g T e n

  25. Slide 25: Lending Profile

    Lending Profile Borrowing Mix (%) Top 5 Lending Partners (INR Crore) 1,164 1,368 1,518 1,888 2,161 Top 5 Lenders % of Borrowings Lender 1 – Term Loans, FDOD & DA 20.9% 24.0% 27.0% 29.3% 33.0% 33.9% Lender 2 –Term Loans, PTC & DA 8.3% 5.9% 3.2% Lender 3 – Term Loans, FDOD & DA 7.4% 1.9% 2.0% 1.4% Len

  26. Slide 26: Securitization and Lending Partners

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

  27. Slide 27: Strong Financial Performance

    Strong Financial Performance 27

  28. Slide 28: Q1 FY24 Consolidated Profit & Loss Statement

    Q1 FY24 Consolidated Profit & Loss Statement Particulars (INR Crore) Q1 FY24 Q1 FY23 Y-o-Y (%) Q4 FY23 Q-o-Q (%) FY23 Income from Operations 149.5 78.4 149.3 423.9 Other Income 0.0 0.5 0.0 0.0 Gross Total Income 149.5 78.9 89.5% 149.3 0.1% 423.9 Finance Costs 64.0 28.6 63.3 172.0 Net Total Income (N

  29. Slide 29: Balance Sheet as on June 2023

    Balance Sheet as on June 2023 Particulars (INR Crore) Consolidated Standalone Particulars (INR Crore) Consolidated Standalone ASSETS Jun-23 Mar-23 Jun-23 Mar-23 LIABILITIES & EQUITY Jun-23 Mar-23 Jun-23 Mar-23 Financial Assets Equity Share capital 8.5 8.5 8.5 8.5 Cash and cash equivalents 77.7 26.2

  30. Slide 30: Consolidated Business Performance

    Consolidated Business Performance (INR Crore) AUM Disbursement Gross Total Income 2,143 631 149 150 1,943 537 1,642 478 1,388 1,436 103 380 93 79 278 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Net Total Income Pre-provision Operating Prof

  31. Slide 31: Consolidated Business Performance

    Consolidated Business Performance Net Interest Margin (%) Cost to Income Ratio (%) Yield (%) 15.5% 15.0% 36.8% 35.6% 28.3% 14.2% 34.6% 26.0% 25.9% 13.4% 24.2% 23.9% 12.4% 27.0% 26.0% Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Asset Qualit

  32. Slide 32: PAR Movement

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

  33. Slide 33: Q1 FY24 – Standalone Profit & Loss Statement (2W & MSME)

    Q1 FY24 – Standalone Profit & Loss Statement (2W & MSME) Particulars (INR Crore) Q1 FY24 Q1 FY23 Y-o-Y (%) Q4 FY23 Q-o-Q (%) FY23 • Standalone AUM grew by 49.8% YoY to INR 343 Crore as compared to INR 229 Crore Income from Operations 29.4 21.3 27.4 94.4 • With an upswing in rural economy and strong

  34. Slide 34: Standalone Business Performance

    Standalone Business Performance (INR Crore) AUM Disbursement Gross Total Income 343 95 28 315 27 14 84 275 66 4 4 246 61 69 17 21 22 229 20 58 62 3 49 55 19 4 4 47 9 12 276 81 23 24 255 67 197 217 53 16 16 18 182 43 50 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY

  35. Slide 35: Q1 FY24 – Namra Finance Profit & Loss Statement

    Q1 FY24 – Namra Finance Profit & Loss Statement Particulars (INR Crore) Q1 FY24 Q1 FY23 Y-o-Y (%) Q4 FY23 Q-o-Q (%) FY23 • Our technological advancements, along with the rising demand in rural India, have resulted an AUM growth Income from Operations 120.3 57.4 122.1 331.5 of 55.4% YoY and 10.6% QoQ

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

    Microfinance Business Performance – Namra Finance (1/2) (INR Crore) AUM Disbursement Gross Total Income 1,801 536 122 120 1,628 453 1,367 409 1,159 1,190 81 317 71 58 223 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Net Total Income Pre-pro

  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% 36.0% 33.9% 32.2% 13.0% 12.7% 27.0% 12.5% 12.0% 24.4% 23.2% 22.9% 21.5% 23.1% 21.9% Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY

  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 Ms. Krunali Shah / Mr. Abhishek Shah Mr. Vivek Modi krunali.shah@sgapl.net / abhishek.shah@sgapl.net Chief Fi

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