Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY2022 Earnings Presentation
52 slides from Mahindra & Mahindra Financial Services's earnings presentation, Feb 2, 2022
Slide 1: Cover letter to stock exchanges
Mahindra & Mahindra Mahindra FINANCE Financial Services Ltd. Mahindra Towers, 4th Floor, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 018 India Tel: +91 22 66526000 Fax: +91 22 24984170 +91 22 24984171 2 February 2022 To, BSE Limited, (Security Code: 532720) Phiroze Jeejeebhoy Towers, Dalal Street, For
Slide 2: Quarter Result Update December 2021
Mahindra & Mahindra Financial Services Limited Quarter Result Update December - 2021 Corporate Office: Regd. Office: Mahindra Towers, 4th Floor, Gateway Building, Apollo Bunder, Dr. G. M. Bhosale Marg, Worli, Mumbai-400 001, India Mumbai-400 018, India Tel: +91 22 2289 5500 Tel: +91 22 6652 6000 Fax
Slide 3: Mahindra FINANCE
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives 1 Risk Management Policies Transforming rural lives across the country 2 Mahindra FINANCE
Slide 4: Executive summary (1/2)
Executive summary (1/2) • Financial Performance: ➢ PAT for Q3FY22 at Rs. 894 crores, buoyed by improvement in asset quality and resultant reversals of provisions ➢ PPOP growth of 5% QoQ as NIMs expand • Growth Drivers: ➢ Disbursement growth of 28% YoY; 24% QoQ ➢ Sequential growth in loan book in the
Slide 5: Executive summary (2/2)
Executive summary (2/2) • Asset Quality: Gross Stage 3 reduction of 1.4% from 12.7% to 11.3%; simultaneous improvement in Stage 2 assets ➢ The Collection War Room set-up in Q2FY22 stepped up its execution on age-wise buckets; ➢ Consequent to reduction in Stage - 3, company has been able to make prov
Slide 6: Asset Quality and Provisions
Asset Quality and Provisions INR Crores Stage 3 AUM movement # Gross Stage 3% 7,931 1,360 7,088 1,862 341* 12.7% Q3F22: Stage 3 AUM 11.3% • 60% of the provision of Rs. 2,517 > Cr made in Q1 FY22 reversed till Q3 aggregating to Rs. 1,510 cr (Rs. Sep-21 Resolved Forward Net Dec-21 764 cr in Q2; Rs. 74
Slide 7: Business strength
Business strength Overlay provisions (Rs. Crs) Capital Adequacy Stage 3 - Coverage Ratio 2,038 53.2% 26.8% 36.6% 1,064 26.4% 9M F21 9M F22 9M F21 9M F22 9M F21 9M F22 Overlay provisions maintained Well capitalized Prudent 6 Mahindra FINANCE
Slide 8: Mahindra FINANCE
Executive Summary Financial Information - Standalone Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives 1 Risk Management Policies Transforming rural lives across the country 7 Mahindra FINANCE
Slide 9: Break down of Disbursements
Break down of Disbursements on standalone basis Nine month ended Nine month ended Year ended Asset Class Dec – 21 Dec – 20 March – 21 Auto/ Utility vehicles 35% 35% 34% Tractors 19% 20% 18% Cars 20% 21% 21% Commercial vehicles and Construction equipments 5% 5% 5% Pre-owned vehicles 17% 10% 12% SME a
Slide 10: Break down of Business Assets
Break down of Business Assets on standalone basis Nine month ended Nine month ended Year ended Asset Class Dec – 21 Dec – 20 March – 21 Auto/ Utility vehicles 32% 30% 30% Tractors 17% 17% 17% Cars 22% 22% 22% Commercial vehicles and Construction equipments 13% 17% 16% Pre-owned vehicles 10% 9% 9% SM
Slide 11: Break down by Geography
Break down by Geography on standalone basis December 2021 9M FY 2022 December 2020 9M FY 2021 10% 16% 12% 15% 14% 10% 18% 12% 22% 19% 20% Loan Assets 27% 26% Disbursement * 23% 20% 18% 29% 29% 29% 31% CENTRAL EAST NORTH SOUTH WEST NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmi
Slide 12: Broad Based Liability Mix
Broad Based Liability Mix on standalone basis All figures in INR crores Funding Mix by Investor Category Funding Mix by type of Instrument Dec’21 Mar’21 Dec’21 Mar’21 Investor Type Instrument Type Amount % Share % Share Amount % Share % Share Banks/ Dev. Institutions 26,287 46.0% 50.5% NCDs 16,028 2
Slide 13: ALM Position and Liability Maturity
ALM Position and Liability Maturity All figures in INR crores Cumulative Inflow Cumulative Outflow Cumulative Mismatch % 70,000 120% 60,190 60,000 100% 52,202 48,979 50,000 44,007 80% 40,000 29,237 60% 30,000 22,555 19,087 40% 20,000 13,678 12,200 7,577 8,457 20% 10,000 5,605 4,789 2,854 0 0% Upto U
Slide 14: Key Financials
Key Financials on standalone basis Disbursement Total Income Profit after Tax Q3 FY 22 Rs. 8,032 crores Rs. 2,543 crores Rs. 894 crores Q3 FY 21 28% Rs. 6,270 crores 4 1% Rs. 2,575 crores NA Rs. - 274 crores r 9M FY 22 Rs. 18,380 crores Rs. 7,252 crores Rs. 388 crores 9M FY 21 41% Rs. 13,031 crores
Slide 15: Growth Trajectory
Growth Trajectory on standalone basis Loan Book (1) (Rs. crores) Revenues (Rs. crores) 10,517 1 64,993 10,245 1 61,250 59,947 62,124 58,278 8,810 I 1 7,879 1 7,252 1 1 1 1 1 1 1 i I 1 I . FY19 FY20 FY21 9MFY21 9MFY22 FY19 FY20 FY21 9MFY21 9MFY22 Pre-Provisioning Operating Profit (Rs. crores) Profit
Slide 16: Financial Performance
Financial Performance ■ on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 1 2.6% I I 38.0% 37.3% I 33.8% 28.2% I 26.9% 1.3% I 0.7% -I- 0.4% I 0.3% I Mil FY19 FY20 FY21 ! 9MFY21 9MFY22 FY19 FY20 FY21 9MFY21 9MFY22 Return on Net Worth (RONW) (2) (%) Asset Quality (%) Gros
Slide 17: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in crores) Q3FY22 Q2FY22 Q-o-Q Q3FY21 Y-o-Y FY21 Revenue from operations (A) 2,531 2,508 1% 2,542 0% 10,395 Less: Finance cost (B) 951 1,015 -6% 1,158 -18% 4,733 NII (C= A+B) 1,580 1,493 6% 1,384 14% 5,662 Other Income (D) 11 14 -22% 33 -66% 122 Tota
Slide 18: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in crores) I 9MFY22 I 9MFY21 I Y-o-Y I FY21 Revenue from operations (A) 7,215 7,795 -7% 10,395 Less: Finance cost (B) 2,984 3,644 -18% 4,733 NII (C= A+B) 4,231 4,151 2% 5,662 Other Income (D) 37 84 -56% 122 Total Income (E=C+D) I 4,268 I 4,235 I 1% I
Slide 19: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in crores) As on Dec 31, 2021 As on Dec 31, 2020 As on Mar 31, 2021 ASSETS Financial Asset a) Cash and cash equivalents 337 1,252 571 b) Bank balance other than (a) above 3,436 2,360 2,699 c) Derivative financial instruments 66 16 26 d) Trade Receivables 6 8
Slide 20: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in crores) As on Dec 31, 2021 As on Dec 31, 2020 As on Mar 31, 2021 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 203 100 173 b) Payables i) Trade payables 683 824 596 ii) Other payables 24 21 47 c) Debt Securities
Slide 21: Summary & Key Ratios
Summary & Key Ratios on standalone basis Nine-Month ended Nine-Month ended Year ended Particulars Dec – 21 Dec – 20 March – 21 I I I RONW (Avg. Net Worth) - annualised 3.5% 1.9% 2.5% Debt / Equity 3.80:1 4.04:1 3.98:1 Capital Adequacy$ 26.8% 26.4% 26.0% Tier I 23.3% 21.9% 22.2% Tier II 3.5% 4.5% 3.8
Slide 22: Spread Analysis
Spread Analysis on standalone basis Nine-Month ended Nine-Month ended Year ended Particulars Dec – 21 Dec – 20 March – 21 1 1 1 Total Loan Income / Average Business Assets 13.8% 14.7% 14.8% Total Income / Average Assets 12.7% 13.9% 13.9% Interest cost / Average Assets 5.2% 6.4% 6.2% Gross Spread 7.5
Slide 23: Collection Efficiency and Restructuring
Collection Efficiency and Restructuring on standalone basis Collection Efficiency^ Oct Nov Dec Q3 FY22 Q2 FY22 FY 2022 91% 94% 100% 95% 98% FY 2021 82% 84% 96% 88% 82% ^ Computed as (Current month demand collected + Overdues collected)/(Current month demand due for the month) Without considering res
Slide 24: Stage - Analysis
Stage 3 - Analysis on standalone basis Particulars (Rs. in crores) except figures in % As on Dec 31, 2021 As on Sep 30, 2021 As on Dec 31, 2020 As on Mar 31, 2021 Business Assets (including Provisions) 63,944 63,618 66,525 64,608 Gross Stage 3 7,223 8,069 6,642 5,786 Less: Stage 3 ECL Provisions 3,8
Slide 25: Movement of Provisions and Management Overlay
Movement of Provisions and Management Overlay on standalone basis Rs. in crores I Q3FY22 I 9MFY22 I ECL Provisions I Overlay I Total I ECL Provisions 1 Overlay 1 Total Stage-1 Provisions (39) 0 (39) (52) 7 (45) Stage-2 Provisions (271) 1 (270) 559^ 3 562 Stage-3 Provisions (362) (75) (437) 778 (288)
Slide 26: Stage Wise Provisioning
Stage Wise Provisioning on standalone basis Stage-Wise Assets and Provisioning As on 31st Dec 2021 As on 30th Sep 2021 As on 31st Mar 2021 I Rs. in crores Business Assets Provisions & Business Assets Provisions & Business Assets Provisions & (Amount and %) Coverage (Amount and %) Coverage (Amount an
Slide 27: Mahindra FINANCE
Executive Summary Financial Information - Consolidated Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives 1 Risk Management Policies Transforming rural lives across the country 26 Mahindra FINANCE
Slide 28: Key Financials (Consolidated)
Key Financials (Consolidated) on consolidated basis Disbursement Total Income Profit after Tax Rs. 8,520 crores Rs. 2,986 crores Rs. 992 crores Q3 FY 22 Q3 FY 21 30% Rs. 6,537 crores I I I 4 0% Rs. 2,993 crores I I I NA Rs. -223 crores I I I I 1- L I I I I I I I I I I Rs. 19,330 crores Rs. 8,503 cro
Slide 29: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Particulars (Rs. in crores) Q3FY22 Q2FY22 Q-o-Q Q3FY21 Y-o-Y FY21 Revenue from operations (A) 2,974 2,929 2% 2,958 1% 12,050 Less: Finance cost (B) 1,070 1,143 -6% 1,312 -18% 5,307 NII (C= A+B) I 1,904 I 1,786 I 7% I 1,646 I 16% I 6,743 Other Income (D) 11 22 -48%
Slide 30: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Particulars (Rs. in crores) I 9MFY22 I 9MFY21 I Y-o-Y I FY21 Revenue from operations (A) 8,452 9,050 -7% 12,050 Less: Finance cost (B) 3,364 4,081 -18% 5,307 NII (C= A+B) I 5,088 I 4,968 I 2% I 6,743 Other Income (D) 50 82 -39% 120 Total Income (E=C+D) I 5,138 I 5,
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in crores) As on Dec 31, 2021 As on Dec 31, 2020 As on Mar 31, 2021 ASSETS Financial Asset a) Cash and cash equivalents 466 1,717 808 b) Bank balance other than (a) above 3,693 3,145 3,174 c) Derivative financial instruments 67 16 26 d) Trade Receivables 6
Slide 32: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in crores) As on Dec 31, 2021 As on Dec 31, 2020 As on Mar 31, 2021 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 204 100 173 b) Payables i) Trade payables 843 981 732 ii) Other payables 24 20 47 c) Debt Securiti
Slide 33: Mahindra FINANCE
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives 1 Risk Management Policies Transforming rural lives across the country 32 Mahindra FINANCE
Slide 34: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Year ended Particulars (Rs. in crores) Q3FY22 Q3FY21 9M FY22 9M FY21 March – 21 Loans disbursed 488 267 951 373 797 No. of Customer Contracts (nos.) 23,806 11,558 45,412 14,622 34,559 Loans & Advances (net) 7,030 7,275 7,030 7,275 7,128 Total income 353 354 1,0
Slide 35: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Year ended Particulars (Rs. in crores) Q3FY22 Q3FY21 9M FY22 9M FY21 March – 21 No. of Policies for the Period (nos.) 5,25,623 4,56,223 12,71,491 9,78,443 1,439,023 Net Premium 610 528 1,538 1,210 1,794 Total income 97 81 234 182 269 PBT 24 20 42 28 44 PAT 18 15 31
Slide 36: Mahindra FINANCE
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives 1 Risk Management Policies Transforming rural lives across the country 35 Mahindra FINANCE
Slide 37: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 1.1 trillion)* About MMFSL: MMFSL (Mcap: Rs 206 billion)*, one of India’s leading non-banking finance companies focused in the rural and semi-urban sector
Slide 38: MMFSL Group structure
MMFSL Group structure (1) 80% Mahindra Mahindra Insurance Brokers Limited (“MIBL”) Rise. Mahindra & Mahindra Limited 98.42%(2) Mahindra Rural Housing Finance Limited (“MRHFL”) 52.16% 49% Mahindra Finance USA LLC (Joint venture with Rabobank group subsidiary) Mahindra FINANCE 51%(3) Mahindra Manulife
Slide 39: Our Journey
Our Journey Commenced Housing Finance Maiden Retail NCD Issue of Rs. business through MRHFL QIP Issue of Rs. 426 crores 1000 crores Oversubscribed over 7x of base Raised Rs. 414 crores through JV with Rabobank subsidiary for tractor issue size of Rs. 250 crores Rights Issue of Rs. Private Equity fin
Slide 40: Shareholding Pattern (as on December 31, 2021)
Shareholding Pattern (as on December 31, 2021) Shareholding Pattern Top 10 Public Shareholders ▪ Life Insurance Corporation Of India 12.78% ▪ Wishbone Fund, Ltd. ▪ HDFC Life Insurance Company Limited 15.80% ▪ Valiant Mauritius Partners Offshore Limited 52.16% ▪ HDFC Trustee Company Ltd ▪ Ashish Dhaw
Slide 41: Mahindra FINANCE
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives 1 Risk Management Policies Transforming rural lives across the country 40 Mahindra FINANCE
Slide 42: Business Strategy
Business Strategy Grow in rural and semi urban markets by providing financing, investment and insurance solutions Expand Branch Network Leverage existing customers base through Direct Marketing Initiatives Diversify Product Portfolio: Nurture new businesses of Digital Finance and Leasing Broad base
Slide 43: Extensive Branch Network
Extensive Branch Network ◼ Extensive branch network with presence in 27 states and 7 union territories in India through 1,385 offices ◼ Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of Central East North 2 21 South West 27 1,388 1,385 35 1,284 1,321
Slide 44: Diversified Product Portfolio
Diversified Product Portfolio ▪ Loans for auto and utility vehicles, tractors, cars, commercial vehicles and construction Vehicle Financing equipments Pre-Owned Vehicles ▪ Loans for pre-owned cars, multi-utility vehicles, tractors and commercial vehicles I pa ▪ Loans for varied purposes like project
Slide 45: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives ▪ Foster a Digital Learning ecosystem that drives a culture of ▪ All our offices are connected to the centralised data centre in anytime-anywhere learning. Mumbai through Lease line/tablets ▪ Structu
Slide 46: Credit Rating
Credit Rating MMFSL believes that its credit rating and strong brand equity enables it to borrow funds at competitive rates Credit Rating India Ratings Outlook Long term and Subordinated debt (incl. MLD); Bank Facilities > IND AAA IND PP-MLD AAA emr Stable Short term debt > IND A1+ CARE Ratings -- O
Slide 47: Mahindra FINANCE
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives Risk Management Policies Transforming rural lives across the country 46 Mahindra FINANCE
Slide 48: Awards & Accolades, CSR Initiatives
Awards & Accolades CSR Initiatives ■ Ranked 54th among India Best Companies to Work 2021 by Great Place ■ Launched flagship program for the holistic development of our driver to Work ® Institute community and their family members. ■ India’s 30th Best workplaces in BFSI 2021 by Great Place to Work ®
Slide 49: Mahindra FINANCE
Executive Summary Financial Information Key Subsidiaries Company Overview Business Strategy Awards & CSR Initiatives 1 Risk Management Policies Transforming rural lives across the country 48 Mahindra FINANCE
Slide 50: Risk Management Policies
Risk Management Policies Provisioning Norms Stage Description Provision Mechanism Stage 1 0- 30 days past due PD * LGD * Stage 1 Asset Stage 2 > 30 to <= 90days past due PD * LGD * Stage 2 Asset Stage 3 > 90 days past due LGD * EAD of Stage 3 Asset* The Company may also make additional management ov
Slide 51: Disclaimer
Disclaimer This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Mahindra & Mahindra Financial Services Limited (the “Company”), nor shall it or any part of it or
Slide 52: Thank You
Thank You Transforming rural lives across the country 51 Mahindra FINANCE
Mahindra & Mahindra Financial Services — Q3 FY2022 Earnings Presentation on 6ix