Sammaan Capital Ltd · NSE:SAMMAANCAP
Sammaan Capital — Indiabulls Housing Finance — Investor Presentation (September 2016)
62 slides from Sammaan Capital's investor presentation, Sep 21, 2016
Slide 1: Indiabulls Housing Finance Limited
Indiabulls Housing Finance Limited
Slide 2: Safe Harbour Statement
Safe Harbour Statement This document contains certain forward-looking statements based on current expectations of Indiabulls Housing Finance Ltd. (CIN: L65922DL2005PLC136029) management. Actual results may vary significantly from the forward-looking statements in this document due to various risks a
Slide 3: Contents
Contents Pg. No. 1. Business Update 4 2. Operational Update 8 3. Indian Mortgage Market 13 4. Financial and Operational Highlights 25 5. e-Home Loans 33 6. LAP Grading 38 7. Liabilities Profile 44 8. Corporate Social Responsibility 51 9. Key Ratios, Valuations and Shareholding 54 10. Detailed Financ
Slide 4: Business Update
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Business Update
Slide 5: Our Journey
Our Journey 2015-16 Balance Sheet: ₹ 764.4 Bn PAT: ₹ 23.4 Bn ₹ 40 Bn raised through QIP 339.6* issue 2014-15 Net worth of ₹ 107 Bn: 2nd highest among private HFCs/ NBFCs 198.4 2012-13 Credit Rating upgraded to AAA Gross disbursements cross ₹ 1,000 Bn 84.6 Balance Sheet: ₹ 572.3 Bn PA
Slide 6: Business Update
Business Update Y-o-Y Q1 FY 16-17 Q1 FY 15-16 Growth (%) Balance Sheet (₹ Bn) 820.69 599.59 36.9% Loan Assets (₹ Bn) 710.26 540.22 31.5% Total Revenues (₹ Bn) 25.97 20.25 28.3% NII (₹ Bn) 10.53 8.21 28.2% PBT (₹ Bn) 8.70 6.92 25.7% PAT (₹ Bn) 6.30 5.11 23.2% Y-o-Y FY 15 - 16 FY 14 - 15 Growth (%) Ba
Slide 7: India's 1st Online Home Loans
: India’s 1st Online Home Loans Benefits to Customer • Branch in pocket - 24x7 access • Entire process from loan application to loan disbursal is online • Aadhar enabled eSignature – no need for scores of signatures • eKYC – biometric enabled, paper-free quick KYC • Videos and multimedia based loan
Slide 8: Operational Update
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Operational Update
Slide 9: Business Summary
Business Summary • Loans Outstanding : ₹ 710.26 Bn (June 30, 2016) : (US$ 10.60 Bn) • Loan Assets CAGR (5 years) : 28 % • Cumulative Loans given to retail Customers : 8,47,791 • Cumulative Loans Disbursed till date : ₹ 1,380.0 Bn (US$ 20.60 Bn) • Cost to Income Ratio (FY 2016) : 14.3% • Profit After
Slide 10: Growth Track Record
Growth Track Record Balance Sheet Loan Assets Revenue CAGR: 25% CAGR: 28% CAGR: 30% 764 821 92 687 710 572 73 522 59 391 444 412 48 322 344 38 253 275 25 26 198 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Jun-16 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Jun-16 FY11 FY12 FY13 FY14 FY15 FY16 Q1 FY17 NII
Slide 11: Credit Ratings
Credit Ratings Long Term Short Term Rating Rating CARE Ratings AAA A1+ Brickwork Ratings AAA CRISIL (A Standard & Poor’s Company) AA+ A1+ ICRA (An Associate of Moody’s Investor Service) AA+ A1+ India Ratings & Research (A Fitch Group A1+ Company) In Q1 FY17 IBHFL’s subordinate debt credit rating was
Slide 12: Country Wide Reach
Country Wide Reach Head office • Core credit committee Master Service • Loans above pre- Centers (MSC) defined limits go to • Regional credit hub the committee Branches • Detailed credit • Walk-in analysis branches • Underwrites high • Customer Service interaction and value cases Centers service del
Slide 13: Indian Mortgage Market
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Indian Mortgage Market 13
Slide 14: Growth Momentum: Trends in Residential Real Estate
Growth Momentum: Trends in Residential Real Estate • The real estate sector in India is at an inflection point, with sales in the top six residential markets showing strong positive uptake • Mumbai residential sales up y-o-y by 23%1 for H1 CY 2016 • Bangalore residential sales up y-o-y by 18% 1 for
Slide 15: Growth Momentum: Trends in Commercial Real Estate
Growth Momentum: Trends in Commercial Real Estate • Office space demand in the first half of CY 2016 grew by 12%1 y-o-y across top 6 cities in India • Office space leasing in the top 7 cities of India was up by 18% y-o-y in CY20152 • Absorption of 17 Mn sqft during H1 CY 2016 – Mumbai Metropolitan R
Slide 16: Accelerators of Housing
Accelerators of Housing First 6 Months of CY2016: Boost to the Housing Sector Real Estate (Regulatory & Development) Act, 2016 will lead to a structured, transparent and Regulator disciplined sector Increased tax incentive reduces effective housing loan yields to 4.0% for a 9.4% housing loan for fir
Slide 17: Housing Potential: Driven by Favourable Demographics
Housing Potential: Driven by Favourable Demographics • Urban housing requirement: estimated at 45 million units by 20221 • Demand continues to increase due to rapid urbanization, which is expected to rise to 40% by 2030, and growing trend of nuclear families 88% 81% 41% 26% 29% 17% 20% 09% India Tha
Slide 18: Tax Incentive for Affordable Housing
Tax Incentive for Affordable Housing Particular 2016 2010 2000 Loan amount 2,400,000 2,400,000 2,400,000 Nominal Interest Rate(%) 9.40% 9.25% 13.25% Deduction allowed on interest repayment* 250,000 150,000 75,000 Deduction allowed on principal repayment# 150,000 100,000 20,000 Tax Rate applicable 34
Slide 19: Buying a House: Prudent Financial Investment
Buying a House: Prudent Financial Investment Rental Yield v/s Housing Loan Cost 3.7% 3.8% 3.9% 3.9% 4.0% 3.0% 3.1% 2.5% 2.2% 2.1% Ahmedabad Bengaluru Chennai Delhi Hyderabad Kolkata Mumbai Pune India Rental yield Effective Interest Rate on Housing Loans (4.0%) Source: NHB; Industry reports Increasin
Slide 20: Mortgage Market Growth
Mortgage Market Growth Growing HFC Market Share in a Steadily Expanding Housing Loans Market 17% 18% 18% CAGR HFC CAGR: 22% 10,299 8,887 7,526 39% 6,249 38% 5,538 37% 4,595 36% 34% 33% Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Banks' Share HFCs' Share (Amounts in ₹ Bn) • Housing loan market is conce
Slide 21: No Regulatory Arbitrage: Regulatory Regime for HFCs at par with Banks
No Regulatory Arbitrage: Regulatory Regime for Housing Finance Co’s at par with Banks Parameters HFCs Banks NBFCs NPA Recognition 90 dpd 90 dpd 120 dpd CRAR 12% 9% 15% - Tier 1 6% 6% 7.5% Standard Asset Housing Loans 0.4% 0.4% 0.25% Provisions Others 1% 0.25-1% 0.25% SARFAESI Coverage Yes Yes Yes •
Slide 22: Recent Regulatory Impetus
Recent Regulatory Impetus Government policy focus and historically superior credit quality of housing loans has prompted the regulator to increase operational leverage and flexibility of the housing finance sector With effect from 9th Oct 15 In the past Ticket Size Bands Ticket Size Bands LTV <= 3 M
Slide 23: Housing Loans: Lowest Risk Asset Class
Housing Loans: Lowest Risk Asset Class Split of Banking NPA levels (FY 12) GNPA (%) Comparison between Banks and HFCs Priority Sector Retail Loans Industries 7.6% 4.3% 3.8% 2.9% 3.2% 2.4% 1.3% 1.2% 1.1% 1.1% 1.1% 1.1% Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Banks HFCs Source: RBI and NHB Source: R
Slide 24: Loan Against Property Market
Loan Against Property Market Secured Loans to Small Businesses Basis of Loan Appraisal Collateral Yields Risk Level Factory/ office space Lending against components of Inventory 18%+ High business Business receivables Home/ commercial Asset based lending 14% - 18% Moderate property Self-occupied Cas
Slide 25: Financial and Operational Highlights
Financial and Operational Highlights 25
Slide 26: Balance Sheet Assets
Balance Sheet Assets 5% 19% Loan Book: 76% Cash & Liquid Investments*: 19% Other Assets: 5% 76% Total Assets As at June 30, 2016 ₹ 820.7 Bn (US$ 12.25 Bn) As at June 30 , 2015 ₹ 599.6 Bn (US$ 8.95 Bn) Cash, Cash Equivalents and Investments in Liquid Debt Instruments 26 US $ amounts are converted bas
Slide 27: Asset Composition
Asset Composition Q1FY 15-16 Q1FY 16-17 2% 22% 23% 76% 77% Mortgage Loans Corporate Mortgage Loans Commercial Vehicle Loans • Housing loans, which forms the majority of incremental disbursals, are disbursed at an average ticket size of ₹ 2.5 Mn; average LTV of 71% (at origination) • Retail loans’ ru
Slide 28: Capital Conservation, Loan Book Growth at Steady Spreads
Capital Conservation, Loan Book Growth at Steady Spreads Loan Assets (₹ Bn) Loans Sold (₹ Bn) Stable Spreads Loan Assets 5-Yr CAGR: 28% (in preceding 12 months) 50 Own Book 5-Yr CAGR: 25% 710 42 12.56% 12.52% 12.43% 540 82 420 61 28 3.16% 3.18% 3.18% 56 628 479 9.40% 9.34% 9.25% 364 June 14 June 15
Slide 29: Asset Quality
Asset Quality As at June 30, 2016 0.84% 0.85% 0.84% (in ₹ Bn) NPA (90+ dpd): 5.98 Provisions for 0.49% 0.49% 0.48% Contingencies: 8.75 Of which 0.35% 0.36% 0.36% NPAs: 3.40 Other provisioning: 5.35 Regulatory Provisioning: 5.76 June 14 June 15 June 16 Excess Provisioning Gross NPA General & Specific
Slide 30: Retail Mortgage Loans' Sourcing
Retail Mortgage Loans' Sourcing 84% of Mortgage loans are sourced in-house 10% 16% 74% Direct Sales Team* External Channels Branch Walk-ins • Nearly 85% of the incremental sourcing is done in-house by on-rolls employees *Direct Sales Team: on-rolls sales employees 30
Slide 31: Housing Loan Profile: Focus on Affordable Housing
Housing Loan Profile: Focus on Affordable Housing Average Loan Size ₹ 2.5 Mn Maximum Loan to Value 80% Average Loan to Value 71% (at origination) Average Loan Term 15 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing • RBI defines affordable housing finance as ho
Slide 32: Conservative Loan Against Property Profile
Conservative Loan Against Property Profile Average Loan Size ₹ 7.3 Mn Maximum Loan to Value 65% Average Loan to Value 49% (at origination) Average Loan Term 7 years Primary Security Mortgage of property financed Repayment Type Monthly amortizing Basis of Credit Appraisal Business Cash flow analysis
Slide 33: India's first e-Home Loans
Indiabulls HOME LOANS ~_Ab Ghar Aa Jao 7) India’s first ——s<. e-Home LO@ansS uo 33
Slide 34: Evolution of Home Loans Distribution Model
Evolution of Home Loans Distribution Model • Entirely branch based. Multiple customer visits to the branch • Long-drawn process usually taking 20+ days Pre 2005 • Tedious process for subsequent disbursals • Multiple visits for on-going loan management, tax docs etc • Lead generation at residential c
Slide 35: Traditional Home Loans Model
Traditional Home Loans Model Application & Credit Appraisal & Disbursal Document Completion Sanction Appointment with loan executive Manual data entry from application form Customer has to visit branch Hand-filled lengthy loan application form Manual scrutiny of documents Physical copies of all docu
Slide 36: India's First Online Home Loans
: India’s First Online Home Loans Application & Credit Appraisal & Disbursal Document Completion Sanction Online form filled at customer convenience Focus on appraisal. No manual data entry No requirement to visit the branch - Fields from app form. Click-of-button call centre support Loan agreement
Slide 37: Manifold Operational Leverage
: Manifold Operational Leverage Efficiency and Productivity Cost Reduction • Seamless sourcing process. Low customer drop-out • Save in manpower from automation of effort-intensive steps • Time spent on travel vastly reduced • Vastly increased productivity of existing resources • Manual data entry e
Slide 38: LAP Grading
LAP Grading A Pioneering Initiative for Improved Risk Management and Greater Transparency 38
Slide 39: Loan Against Property Grading from CRISIL and ICRA
Loan Against Property Grading from CRISIL and ICRA • LAP grading engagement with CRISIL (a Standard and Poor’s Company) and ICRA (a Moody’s Investors Service Company) - CRISIL grades the loans on aspects such as past payment track record; nature of business and financial performance; nature of prope
Slide 40: CRISIL LAP Grading Methodology
CRISIL LAP Grading Methodology Detailed assessment of key factors determining quality of LAP loans Financial Strength Business Management • Interest and debt service cover • Business sector and sectoral prospects • Revenues, margin and profitability • Business duration and track record • Networth an
Slide 41: CRISIL LAP Grading: Updated for Q1 FY17
5th Report CRISIL LAP Grading: Updated for Q1 FY17 Grading Segment Characteristics Total Interest Disbursals Outstanding Grading Quality of Service Loan to EBITDA Apr15 – Liabilities/ Scale LAP Loans# Coverage Value (LTV) Margins Jun16* Total Ratio (ISCR) Networth LAP1 Highest 9.2% 11.4 – 13.5 1.3 –
Slide 42: ICRA LAP Grading Methodology
ICRA LAP Grading Methodology (2nd rating agency to grade LAP loans) • In Q2 FY 2015-16, IBHFL tied up with rating agency ICRA to grade its incremental LAP loans • ICRA LAP Grading reflects ICRA’s assessment of the credit quality of the loan on a ICRA developed customised scale Grading Assessment Par
Slide 43: ICRA LAP Grading: Updated for Q1 FY17
3rd Report ICRA LAP Grading: Updated for Q1 FY17 Grading Characteristics Level of credit Grading Grading Scale Median LTV Median FOIR worthiness Distribution* Over 99% of LAP1 Excellent 15.1% 26% 34% incremental LAP loans LAP2 Good 66.1% 49% 50% are within the top LAP3 Average 18.5% 61% 59% three gr
Slide 44: Liabilities Profile
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Liabilities Profile 44
Slide 45: Liabilities
Liabilities 14% 5% Share Holders’ Funds: ₹ 113.6 Bn (US$ 1.70 Bn) Borrowings: ₹ 662.3 Bn (US$ 9.89 Bn) Other Liabilities: ₹ 44.7 Bn (US$ 0.67 Bn) 81% Total Liabilities: As of June 30, 2016: ₹ 820.7 Bn (US$ 12.25 Bn) As of June 30, 2015: ₹ 599.6 Bn (US$ 8.95 Bn) US $ amounts are converted based on th
Slide 46: Funding Mix
Funding Mix 2% 2% 13% 11% 11% 52% 49% 47% ECB Sell Down Bank Loans Debentures and Securities 35% 38% 40% June 14 June 15 June 16 Total Borrowings: As of June 30, 2016: ₹ 662.3 Bn (US$ 9.89Bn) As of June 30, 2015: ₹ 508.6 Bn (US$ 7.59 Bn) Higher proportion of variable rate liabilities compared to pee
Slide 47: Strengthening Liability Profile
Strengthening Liability Profile 700 Borrowings (₹ Bn) 662 509 600 379 500 6.3 Borrowings 5.6 400 Net Gearing 4.6 300 200 100 Net Gearing: Borrowings Net of ‘Cash & Cash Equivalents’ and ‘Investments in Liquid - June 14 June 15 June 16 Debt Instruments’ Total Funding (₹ Bn) Net Incremental Contributi
Slide 48: Optimally Matched Balance Sheet
Optimally Matched Balance Sheet Maturity Profile (As of March 31, 2016) 353 333 273* 270 175 153 Up to 1 yr 1 - 5 yrs Over 5 yrs Assets Liabilities (Amounts in ₹ Bn) • * Assets in the ‘Up to 1 Yr’ bucket includes ₹ 128.7 Bn (as of March 31, 2016) of Cash, Cash equivalents and investments in liquid d
Slide 49: 3 Pillars of Long-Term Growth
3 Pillars of Long-Term Growth Profitability Sustainability Scalability Focus on profitability in each business segment Stable senior and mid-manager levels Efficient capital deployment - Senior personnel in key business functions unchanged - Focus on loan sell downs Internal cost structures aligned
Slide 50: Eminent and Experienced Board of Directors
Eminent and Experienced Board of Directors Board of Directors with pre-eminence and experience in diverse fields • Mr. Sameer Gehlaut : Executive Chairman • Mr. Gagan Banga : Vice Chairman and Managing Director • Dr. K.C. Chakrabarty : Former Deputy Governor, The Reserve Bank of India • Justice Suri
Slide 51: Corporate Social Responsibility
Corporate Social Responsibility 51
Slide 52: Indiabulls Foundation: Corporate Social Responsibility
Indiabulls Foundation: Corporate Social Responsibility Four free medical clinics to provide primary and preventive health care to the underprivileged. Diagnosed and treated more than 56,000 patients till date Jan Swasthya Kalyan Vahika vehicles: 9 Mobile medical vans provide free Health primary heal
Slide 53: Indiabulls Foundation: Corporate Social Responsibility
Indiabulls Foundation: Corporate Social Responsibility During the Chennai floods, provided timely relief to 1,500. The nutritional Disaster Relief supplement is a ready to eat mixture providing well needed nourishment to the Chennai flood affected Indiabulls Tie-up with MKCL (Maharashtra Knowledge C
Slide 54: Key Ratios, Valuations and Shareholding
Key Ratios, Valuations and Shareholding 54
Slide 55: Rising Productivity Ratios
Rising Productivity Ratios FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 No. of Employees 5,453 4,840 4,099 4,072 4,243 Profit per employee (₹ Mn) 4.3 3.9 3.8 3.1 2.4 Asset per employee (₹ Mn) 140.2 118.2 108.4 80.9 58.5 Cost-to-Income Ratio 14.3% 16.4% 17.1% 18.0% 18.7% 55
Slide 56: Key Financial Metrics
Key Financial Metrics FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 Pre Tax RoAA (%) 4.9% 4.9% 4.8% 4.9% 4.9% Post Tax RoAA (%) 3.7% 3.7% 3.8% 3.8% 3.7% RoE (%)^ 26% 29% 27% 26% 22% Capital Adequacy (%)# 23.38% 19.60% 20.47% 18.58% 19.96% - Tier I# 20.36% 16.28% 16.10% 15.05% 19.27% - Tier II# 3.02% 3.32%
Slide 57: Valuations and Returns
Valuations and Returns June -16 Mar-16 Mar-15 Mar-14 Mar-13 Mar-12 Market Price per Share (₹) 804.9* 674.0 557.9 285.6 271.8 207.1 Market Capitalisation 339.6 284.0 198.4 95.4 84.9 64.5 (₹ Bn) PE Ratio (times) 13.5 11.3 10.2 6.0 6.8 6.5 Book Value per Share (₹) 269.3 253.8 184.5 168.7 165.4 157.7 Pr
Slide 58: Shareholding Pattern
Shareholding Pattern 13.2% 24.2% 2.7% 59.9% Founder Foreign Institutional Shareholding MFs/Banks/IFI Public As on 30th June, 2016 MF: Mutual Funds; IFI: Indian Financial Institutions 58
Slide 59: Detailed Financials
Indiabulls HOME LOANS Ab Ghar Aa Jao 77} Detailed Financials 59
Slide 60: Consolidated Balance Sheet
Consolidated Balance Sheet ₹ 153.35 Bn of Cash & Cash Equivalents and Investments in Liquid Debt Instruments The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 153.35 Bn as at 30th June, 2016. The company receives income from its cash, cash equivalents and investm
Slide 61: Consolidated Income Statement
Consolidated Income Statement The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 153.35 Bn as at 30th June, 2016. The company receives income from its cash, cash equivalents and investments in liquid debt instruments through the quarter, most of which appears in ‘
Slide 62: Thank you
Indiabulls HOME LOANS ~_Ab Ghar Aa Jao 7) Thank you
Indiabulls Housing Finance — Investor Presentation (September 2016) on 6ix