Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY2016 Earnings Presentation
43 slides from Mahindra & Mahindra Financial Services's earnings presentation, June 2015
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update June 2015
Mahindra & Mahindra Financial Services Limited Quarter Result Update JUNE - 2015 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 Fax: +91 22 2287 5485 Tel: +91
Slide 2: Company overview
Company overview Transforming rural lives across the country 2
Slide 3: Background
Background • Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 844 billion)*, one of India’s leading tractor and utility vehicle manufacturers • MMFSL (Mcap: Rs 151 billion)* is one of India’s leading non-banking finance companies foc
Slide 4: MMFSL Group structure
MMFSL Group structure (1) 85% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 87.5%(2) Mahindra Rural Housing Finance Limited (“MRHFL”) 51.20% 49% Mahindra Finance USA LLC (Joint venture with Rabobank group Mahindra & Mahindra subsidiary) Financial Services Limited Mahindra A
Slide 5: Our Journey Thus Far
Our Journey Thus Far Long term debt rating upgraded to AAA by India Ratings and Brickwork CARE Ratings assigned AAA rating to long term debt Reach extended to over 1100 offices FY 15 Crossed 3 million cumulative customer contracts FY 14 Stake sale in MIBL to Inclusion Resources Pvt. Ltd. QIP Issue o
Slide 6: Shareholding pattern
Shareholding pattern (as on June 30, 2015) Top 10 Shareholders Aranda Investments (Mauritius) Pte Ltd Franklin Templeton Investment Funds Non ESOP Amansa Holdings Private Limited Mutual Institutions Funds & Trust 4.7% 0.8% JP Morgan Sicav Investment Company (Mauritius) DII 5.2% Bank Muscat
Slide 7: Industry overview
Industry overview Transforming rural lives across the country 7
Slide 8: Automobile Finance Market to Grow by 16-18% over the next 5 years
Automobile Finance Market to Grow by 16-18% over the next 5 years Growth in New Vehicle Finance Disbursements CAGR FY14- (% growth over previous yr) FY12E FY13E FY14E FY15P FY16P FY19P Cars 8% 1% (7%) 4% 10-12% 17-19% Utility Vehicles 16% 39% (6%) 3% 15-17% 18-20% Commercial Vehicles 17% (12%) (25%)
Slide 9: Auto Industry Long term growth potential
Auto Industry Long term growth potential Strong prospects in the long-term. FY05-10 FY10-15 FY15P FY15-20P Growth to be driven by increase in CAGR CAGR CAGR income of households and higher (%) passenger vehicle penetration (%) (%) (%) Cars and Uvs 13 6 4 12-14 Small Cars to drive growth in the l
Slide 10: Overall Demand Drivers
Overall Demand Drivers Passenger Vehicles Growth CAGR 18% Increase in affordability 14% 13-15% 12-14% 12-14% 13% 13% 13% 10-12% 12% 11% Growth in Addressable Market 8% 6% 5% Entry of New Players and New Model 3% Launches -2% -1% Increase in dealerships and access to Small Cars Sedans Uvs+Van
Slide 11: Auto Industry Volume
Auto Industry Volume Y-o-Y Y-o-Y Domestic Sales 1QFY16 1QFY15 FY15 FY14 Growth Growth (Volume in ‘000) (Nos.) (Nos.) (Nos.) (Nos.) (%) (%) Passenger Vehicles (PVs) Passenger Cars / Vans 482 444 9% 1,876 1,791 5% UVs 171 171 0% 725 717 1% Commercial Vehicles (CVs) M&HCVs 62 50 24% 233 200 17% LCVs 84
Slide 12: Housing Finance Growth
Housing Finance Growth Growth in Housing Finance Disbursements (Rs.bn) 9000 8000 7,861 Growth in disbursements to be 7000 supported by rising focus of 6000 developers on the affordable 5000 4000 housing segment 2,988 3000 2000 1,840 Tier II and III cities to drive 775 1000 growth 0 2005-06 E 201
Slide 13: Business Strategy
Business Strategy Transforming rural lives across the country 13
Slide 14: Business Strategy
Business Strategy Grow in rural and semi urban markets for vehicle and automobile financing Expand Branch Network Leverage existing customers base through Direct Marketing Initiatives Diversify Product Portfolio Broad base Liability Mix Continuing to attract, train and retain talented employees Effe
Slide 15: Extensive branch network
Extensive branch network MMFSL has an extensive branch network with presence in 25 states and 5 union territories in India through 1124 offices as of June 30, 2015 Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 5 HP 28 40 PB UC 19 23 1108 1
Slide 16: Diversified Product Portfolio
Diversified Product Portfolio Loans for auto and utility vehicles, tractors, cars, commercial Vehicle Financing vehicles and construction equipments Pre-Owned Loans for pre-owned cars, multi-utility vehicles, tractors and Vehicles commercial vehicles Loans for varied purposes like project fina
Slide 17: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Quarter ended Quarter ended Year ended Asset Class June – 15 June – 14 March – 15 Auto/ Utility vehicles 31% 33% 33% Tractors 16% 20% 18% Cars 24% 22% 22% Commercial vehicles and 10% 9% 9% Construction equipments Pre-owned vehicles and others 19% 16% 18
Slide 18: Break up of AUM
Break up of AUM As on As on As on Asset Class June – 15 June – 14 March – 15 Auto/ Utility vehicles 31% 30% 31% Tractors 18% 19% 18% Cars 23% 23% 23% Commercial vehicles and 13% 14% 13% Construction equipments Pre-owned vehicles and others 15% 14% 15% 1. Approximate percentages 2. As on 30th June 15
Slide 19: 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 AAA (ind) Stable CARE Ratings Outlook Long term and Subordinated debt AAA -- Brickwork Outlook Long term a
Slide 20: Broad based Liability Mix
Broad based Liability Mix Total consortium size of Rs.15.3 Bn comprising several banks Funding Mix by Investor profile (Jun’ 15) Funding Mix by type of Instrument (Jun’ 15) Insurance Banks for CP, ICD Assignment Co. & Assignment (Rs.30,643 (Rs.14,417 Institutions (Rs.14,417 mn) mn) (Rs.48,886 mn)
Slide 21: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Training programs for employees on regular All our offices are connected to the centralised basis data centre in Mumbai through Lease line/HHD 5 days induction program on product knowledge, T
Slide 22: Financial Information
Financial Information Transforming rural lives across the country 22
Slide 23: Key Financials
Key Financials Q1FY16 Vs Q1FY15 (Figures on standalone basis) Total income Profit after Tax Value of Asset Financed Rs 13,684 mn Rs 890 mn Rs 60,569 mn 7% 43% 9% Rs 12,830 mn Rs 1,549 mn Rs 55,381 mn 23
Slide 24: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) 55.85 329.30 341.19 49.53 296.17 38.95 240.38 13.68 FY13 FY14 FY15 Q1FY16 FY13 FY14 FY15 Q1FY16 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) 99.7 101.3 8.83 8.87 89.6 8.32 56.7 0.89 FY13 FY14 FY15 Q1FY
Slide 25: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 36.4% 4.0% 3.2% 2.5% 33.0% 33.0% 1.9% 32.6% 32.6% 1.0% FY13 FY14 FY15 1QFY15 1QFY16 FY13 FY14 FY15 1QFY15 1QFY16 Return on Net Worth (RONW) (3) (%) Asset Quality 23.5% Gross NPA Net NPA 18.6
Slide 26: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Particulars (Rs. in Million) Q1FY16 Q1FY15 Y-o-Y Q4FY15 Q-o-Q FY15 Revenue from operations 13,163 12,286 7.1% 14,373 (8.4%) 52,799 Securitisation Income (net) 445 465 (4.3%) 834 (46.6%) 2,562 Less: Finance cost 6,445 5,949 8.3% 6,373 1.1% 24,967 NII 7,163 6,802 5.3
Slide 27: Standalone Balance Sheet
Standalone Balance Sheet As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2015 2014 2015 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,128 1,127 1,128 b) Reserves and Surplus 56,498 51,340 55,566 Shareholders' funds 57,626 52,467 56,694 Non-current liabilities a) L
Slide 28: Standalone Balance Sheet (Cont’d)
Standalone Balance Sheet (Cont’d) As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2015 2014 2015 ASSETS Non-current assets a) Fixed Assets 1,106 1,109 1,100 b) Non-current investments 7,914 5,590 7,599 c) Deferred tax assets (Net) 4,280 3,317 4,153 d) Long-term loans and advances
Slide 29: Key Subsidiaries
Key Subsidiaries Transforming rural lives across the country 29
Slide 30: Mahindra Rural Housing Finance
Mahindra Rural Housing Finance Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 15 June – 14 March – 15 Loans disbursed 3,392 2,115 9,896 No. of Customer Contracts (Nos) 25,048 15,257 81,960 Outstanding loan book 23,646 15,190 20,983 Total income 996 674 3,284 PBT 105 79 673 P
Slide 31: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 15 June – 14 March – 15 Total income 317 266 1,262 Net premium 2,499 1,738 8,939 PBT 146 129 653 PAT 96 85 429 No. of Policies for the Period (nos.) 300,483 254,743 1,137,981 No. of employees (
Slide 32: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Quarter ended Quarter ended Year ended Particulars (Rs. in Million) June – 15 June – 14 March - 15 Revenue from operations 15,046 13,768 60,211 Other income 80 76 398 Total Revenue 15,126 13,844 60,609 Expenses: Employee benefits expense 1,593 1,327 5,671 Finance
Slide 33: Consolidated Balance Sheet
Consolidated Balance Sheet As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2015 2014 2015 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,128 1,127 1,128 b) Reserves and Surplus 59,444 53,416 58,299 Shareholders' funds 60,572 54,543 59,427 Minority Interest 516 375
Slide 34: Consolidated Balance Sheet (Cont’d)
Consolidated Balance Sheet (Cont’d) As on Jun 30 As on Jun 30 As on Mar 31 Particulars (Rs. in Million) 2015 2014 2015 ASSETS Non-current assets a) Fixed Assets 1,199 1,189 1,192 b) Non-current investments 5,807 4,071 5,597 c) Deferred tax assets (Net) 4,349 3,351 4,212 d) Long-term loans and advanc
Slide 35: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Quarter ended Quarter ended Year ended Particulars June – 15 June – 14 March – 15 RONW (Avg. Net Worth) 6.2% 12.0% 15.5% Debt / Equity 4.68:1 4.59:1 4.63:1 Capital Adequacy 18.1% 18.1% 18.3% Tier I 15.3% 15.6% 15.5% Tier II 2.7% 2.5% 2.8% EPS (Basic)
Slide 36: Spread Analysis
Spread Analysis Figures on standalone basis Quarter ended Quarter ended Year ended June – 15 June – 14 March – 15 Total Income / Average Assets 15.8% 16.3% 17.1% Interest / Average Assets 7.4% 7.6% 7.7% Gross Spread 8.4% 8.7% 9.4% Overheads / Average Assets 3.1% 2.9% 3.1% Write offs & NPA provisions
Slide 37: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) June – 15 June – 14 March – 15 Gross Non - Performing Assets 29,411 20,278 20,997 Less: NPA Provisions 16,644 10,954 12,815 Net Non – Performing Assets 12,767 9,324 8,182 Total Assets (Incl. NPA Provision) 366,657 325,318 355,128 Gro
Slide 38: Awards & Accolades
Awards & Accolades Transforming rural lives across the country 38
Slide 39: Awards and Accolades
Awards and Accolades Mahindra Finance has been listed on Dow Jones Sustainability Index (DJSI) - Emerging Market Trends for two years consecutively – 2013 & 2014 Mahindra Finance is now a part of the Carbon Disclosure Leadership Index (CDLI) 2014 Mahindra Rural Housing Finance Limited (MRHFL)
Slide 40: Key Risk Management Practices
Key Risk Management Practices Transforming rural lives across the country 40
Slide 41: Conservative Risk Management Policies
Conservative Risk Management Policies Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL 6 and <= 18 10% > 5 and <= 11 10% > 18 and <= 30 20% > 11 and <= 24 50% > 30 and <= 54 30% > 24 months 100% > 54 months 50% Key Risks & Management Strategies Key Risks Management Strategies
Slide 42: 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 43: Thank You
Thank You Transforming rural lives across the country 43
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