Slide 1: Arman Financial Services Ltd. Q1 FY23 Investor Presentation
INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Q1 FY23 - Investor Presentation August 2022
Slide 2: 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 3: Contents
CONTENTS 04 Performance Update – Q1FY23 17 Liability Overview 20 Company Overview 29 Product Overview 34 Annexures
Slide 4: Financial Performance Update – Q1FY23
Financial Performance Update – Q1FY23
Slide 5: Q1 FY23 – Financial Performance Highlights
Q1 FY23 – Financial Performance Highlights Total AUM up by 77% YoY & 13% QoQ to INR 13,880 Mn in Q1FY23 ✓ We have added more than ~50,000 new customers in Q1 FY23. Active Customer base of more than 5.2 lakh. Shareholders Equity Stood at INR 2,280 Mn as on 30 th June 2022. ✓ Debt-Equity Ratio stood a
Slide 6: Update on Collections- Consistently improving for last five quarters
Update on Collections- Consistently improving for last five quarters Update on Collections - ❑ Collections in all the segments were healthy and were aligned to its pre covid levels. • Microfinance and MSME collections was healthy and reached 98.6% during June 2022 . • 2W collections continued to be
Slide 7: Update on Liquidity & Disbursements
. Update on Liquidity & Disbursements Update on Liquidity ❑ Healthy Liquidity position with INR 758.4 Mn in cash/bank balance, liquid investments, and undrawn CC limits • The company has duly repaid all the debt obligations that were due in Q1FY23 • ALM continues to remain positive, and the company
Slide 8: Q1 FY23 – Consolidated Profit & Loss Statement
Q1 FY23 – Consolidated Profit & Loss Statement Particulars (INR Mn) Q1 FY23 Q1 FY22 YoY (%) FY22 FY21 YoY (%) Assets Under Management (AUM) 13,878 7848 77% 12,332 8,144 51% Disbursements 3,796 1,216 212% 1,0233 5,097 101% Shareholder’s Equity * 2279 1,895 20% 2,127 1,868 14% Income from Operations 7
Slide 9: Q1 FY23 - Consolidated Performance Update
Q1 FY23 - Consolidated Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 13,878 12,332 3,796 758 789 10,446 3,375 2,965 587 9,083 2,665 497 508 7,848 1,216 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22
Slide 10: FY22 – Consolidated Balance Sheet
FY22 – Consolidated Balance Sheet Particulars (in INR Mn) Consolidated Standalone Consolidated Standalone ASSETS March 2022 March 2021 March 2022 March 2021 LIABILITIES & EQUITY March 2022 March 2021 March 2022 March 2021 Financial Assets Equity Share capital 85 85 85 85 Cash and cash equivalents 75
Slide 11: Q1 FY23 – Microfinance “Namra” Performance Update
Q1 FY23 – Microfinance “Namra” Performance Update Particulars (INR Mn) Q1 FY23 Q1 FY22 YoY (%) Q4 FY22 QnQ (%) FY22 Asset Under Management 11,590 6310 84% 10,220 13% 10,220 ❖ Q1 FY23 MFI AUM stood at INR 11,590 Mn – higher by 84% vis-à- vis last year Disbursements 3,170 980 222% 2,795 14% 8,401 • Ac
Slide 12: Q1 FY23 - Microfinance Performance Update
Q1 FY23 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 11,589 10,219 3,173 559 577 8,557 2,795 7,417 2,421 428 2,200 367 376 6,307 985 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1
Slide 13: Q1 FY23 – Microfinance Performance Update
Q1 FY23 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 23.6% 22.6% 22.5% 22.8% 21.5% 39.6% 40.0% 23.2% 27.5% 28.0% 15.9% 15.6% 13.1% 13.3% 12.9% Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Yields % NIM % Cost / Income (%) Asset Quality
Slide 14: Q1FY23 – Standalone Performance Update (2W & MSME)
Q1FY23 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q1 FY23 Q1 FY22 YoY (%) Q4FY22 QnQ (%) FY22 ❖ Standalone AUM stood at INR 2289 Mn on 30th June Asset Under Management 2,289 1,540 49% 2,112 8% 2,112 2022 Disbursements 620 230 170% 580 7% 1,832 • MSME AUM increased by 59% YoY to
Slide 15: Q1 FY23 - MSME Performance Update
Q1 FY23 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 1,818 1,651 164 163 1,395 530 502 1,247 1,131 380 108 353 96 99 160 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Asset Quality# Yi
Slide 16: Q1 FY23 - 2W Performance Update
Q1 FY23 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 494 45 461 471 42 410 419 163 30 30 31 112 94 71 79 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Asset Quality Yields % 28.9% 2
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 Q1 FY22 - Borrowing Mix % Q1 FY23 - Borrowing Mix % INR 7,012 Mn * INR 11,637 Mn * Banks & SFBs 7% 2% 24% DFIs (NABARD, MUDRA & SIDBI) 25% 26% 19% NBFC / FI Securitization 4% 6% 6% 12%
Slide 19: Lending partners
Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners NCDs & ECB 22 19
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 ▪ Consistent rating upgrades backed by strong financial & operating focusing on large under-served rural & semi-urban retail markets performance – Currently rated BBB+ by CARE Ratings an
Slide 22: Business Progression
Business Progression Company Disbursement Raised PE Expanded to Crosses 100 crosses INR 750 Cr; incorporated. funding from Maharashtra, branches across 5 100% Cashless AUM crossed Started bill Launched 2W Incofin; MP, UP & states & 3 products; disbursements; INR 1,000 Cr discounting & Loans Disburse
Slide 23: Product Snapshot
Product Snapshot • 30 years of existence • Active customer base of 5.2 lakh • Employee strength of 2700+ employees • Completely in-house operations – Sourcing, Credit & Collections Microfinance MSME Loans 2-Wheeler Loans Rural 2W Loans % of Total AUM 83% 13% 3% 1% LTV Unsecured Cash flow & FOIR base
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: Strong Growth in AUM & Disbursements
Strong Growth in AUM & Disbursements….. Total AUM (INR Mn) 12,332 14000 • Diversified portfolio of 13,878 Mn in Q1 FY23 split between – 12000 • Microfinance: INR 11,589 Mn (83.5%), 13% 12000 10000 4% • MSME Loans: INR 1,818 Mn (13.1%), 8,599 17% 8,144 10000 • 2-Wheeler Loans: INR 471 Mn (3.4%), 8000
Slide 26: 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: 34% CAGR: 34% 6.7% 2,350 Demonetization 2,152 1,950 28.7% 28.3% 27.4% 25.5% 2
Slide 27: Shareholding Pattern
Shareholding Pattern SHAREHOLDING – 30th June 2022 Promoters, 27.4% Public, 50.4% Elevation Capital, 22.3% Source – Company ▪ Elevation Capital (Erstwhile SAIF Partners) invested INR 500 Mn in CCDs in April 2018 Post conversion of CCD’s, Elevation Capital stake in the company stands at 22.3% ▪ Mr. M
Slide 28: Product Overview
MSME EOANS )S Product Overview
Slide 29: Product Overview: Microfinance
Product Overview: Microfinance Product Overview FY22 – Key Metrics (Mn) ▪ JLG model with small ticket loans (Avg. Ticket Size – INR 10,220 8,401 35,000) given to women borrowers for income generating activities such as Livestock, Dairy, Agri allied, Kirana Stores AUM (INR Mn) Disbursement (INR Mn) ▪
Slide 30: Product Overview: 2W & Rural 2W Loans
Product Overview: 2W & Rural 2W Loans Product Overview FY22 – Key Metrics (Mn) ▪ Hypothecation (secured) loans given to self-employed / cash- 461 428 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 31: 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 4 states – Gujarat, MP, Maharashtra & Rajasthan with 45 • Feet-on-Str
Slide 32: Group – CFO
Vivek Modi Group – CFO Manoj Saha / Sonam Raghuvanshi Arman Financial Services Ltd Dickenson World Tel : + 91 79 4050 7000 (Extn. 210) Email : armanfinancial@dickensonworld.com Email : vivek@armanindia.com
Slide 33: Annexures
Ess to INCLUSION 1 = Annexures
Slide 34: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Disbursement growth is driven by customer & branch addition AUM growth exceeds MFI industry growth rates 2.5 2.24 2.32 2.30 11,000 Demonetization 10,220 2.0 Demonetization 1.70 9,000 7,000 6,431 1.5 1.13 6,207 4,837 5,000 1.0 0.74 8,401 5,896 6,531 3,000 3,170 0.5 4,
Slide 35: Microfinance: 5-Year Performance
Microfinance: 5-Year Performance Well diversified across geographies Maintaining high operational efficiency MFI AUM Mix (%) Demonetization 2% 1% 1% 0.2% 6% 7% 1% 2% 5% 9% 61% 21% 20% 1% 11% 4% 17% 18% 18% 56% 1% 13% 21% 24% 48% 21% 18% 43% 45% 42% 21% 13% 27% 72% 25% 27% 22% 44% 31% 27% 27% 23% FY1
Slide 36: 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 1000.0 35.0% 28.9% 800.0 30.0% 25.7% 24.9% 23.9% 25.5% 24.4% 25.0% 600.0 COVID-19 20.0% 1,017 955 900 19.0% 400.0 18.4% 738 15.0% 14.8% 15.6% 16.5% 10.0% 14.0% 200.0 459 461 5.0% 0.0% 0.0
Slide 37: MSME Loans: 5-Year Performance
MSME Loans: 5-Year Performance Disbursement Growth AUM Growth 3500 33000 1,651 1,433 30000 3000 27000 24,586 23,914 24000 2500 1,254 21000 2000 992 18000 16,284 15000 11,246 1500 9,756 461 12000 1000 9000 1,362 1,391 1,054 6000 978 500 61 3000 527 674 0 64 0 FY17 FY18 FY19 FY20 FY21 FY22 FY17 FY18 F