Sammaan Capital Ltd · NSE:SAMMAANCAP
Sammaan Capital — Indiabulls Housing Finance — Investor Presentation (May 2017)
68 slides from Sammaan Capital's investor presentation, May 2, 2017
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.’s (CIN: L65922DL2005PLC136029) management. Actual results may vary significantly from the forward-looking statements in this document due to various risks
Slide 3: Contents
Contents Pg. No. 1. Business Update 04 2. India Home Loans Market 08 3. Financial and Operational Highlights 21 4. LAP Grading and Monitoring of Sold Down Pools 31 5. Liabilities Profile 43 6. eHome Loans 49 7. Corporate Social Responsibility 54 8. Distribution Network, Ratings, Key Ratios, Valuatio
Slide 4: Business Update
Indiabulls HOME LOANS Business Update
Slide 5: Our Journey
Our Journey Balance sheet: ₹ 1.04 Tn. 2016-17 Profit after Tax: ₹ 29.1 Bn Net worth: ₹121 Bn Launched India’s first digital 419.6* home loans platform – 2015-16 eHome Loans IBHFL included in Nifty50 index 283.9 2014-15 Balance Sheet: ₹ 764.4 Bn, PAT: ₹ 23.4 Bn ₹ 40 Bn raised through QI
Slide 6: Business Update
Business Update Key Financial Highlights: FY 16-17 (ending March 31, 2017) Y-o-Y FY 16-17 FY 15-16 Growth (%) Balance Sheet (₹ Bn) 1,037.05 764.36 35.7% Loan Assets (₹ Bn) 913.01 686.83 32.9% Total Revenues (₹ Bn) 117.02 92.26 26.8% NII (₹ Bn) 47.68 37.94 25.7% PAT (₹ Bn) 29.06 23.45 24.0% Year-on-Y
Slide 7: Rating Upgrade by CRISIL, a S&P Subsidiary
Rating Upgrade by CRISIL, a S&P Subsidiary • AA+ Stable upgraded to AA+ Positive, a big step forward to becoming AAA • After HDFC Ltd, IBHFL is only the second independent non-bank company in India to enjoy this rating • IBHFL will gain as cost of borrowing will further come down due to rating upgra
Slide 8: Indian Home Loans Market
Indiabulls HOME LOANS Indian Home Loans Market
Slide 9: Favourable Macros for Mid-Income Affordable Housing
Favourable Macros for Mid-Income Affordable Housing Strong structural drivers and government focus: “Housing for All by 2022” ‒ Mid-income mass housing demand covered under Pradhan Mantri Awas Yojana (PMAY) scheme notified in March 2017 ‒ Home buyers can withdraw from their accumulated Employees’ Pr
Slide 10: Favourable Macros for Mid-Income Affordable Housing
Favourable Macros for Mid-Income Affordable Housing RBI, SEBI and IRDA – All regulatory agencies working in tandem towards “Housing for All by 2022” ‒ SEBI has increased cap on additional exposure to AA (and above) rated HFCs from 25% to 40% in February 2017, the only sector enjoying limit above 25%
Slide 11: Unlocking of EPF Corpus for Purchasing a House and Servicing Home Loan EMIs
Unlocking of EPF Corpus for Purchasing a House and Servicing Home Loan EMIs • Employee Provident Fund Organisation (EPFO) members can withdraw up to 90% of their accumulated corpus for purchase or construction of a house • The balance, unutilised EPF corpus can be further withdrawn to service home l
Slide 12: PMAY and Tax Incentives for Mid-Income Affordable Housing
PMAY and Tax Incentives for Mid-Income Affordable Housing Tremendous boost from expansion of coverage to mid-income affordable housing under Pradhan Mantri Awas Yojana (PMAY) - People earning up to ₹ 150,000 per month now covered under the scheme for purchase of a house of carpet area up to 1,185 Sq
Slide 13: PMAY and Tax Incentives for Mid-Income Affordable Housing
PMAY and Tax Incentives for Mid-Income Affordable Housing Illustration for Indiabulls Housing’s average Home Loan - House value : ₹ 3,500,000 - Home loan amount : ₹ 2,400,000 (Loan to value of 70%) - PMAY subsidy : ₹ 230,156 - Net loan amount : ₹ 2,169,844 Principal Repayment Opening Loan Interest P
Slide 14: EMI Smaller than Rent Cheque: PMAY and Tax Incentive
EMI Smaller than Rent Cheque: PMAY and Tax Incentive for Mid-Income Affordable Housing Rental Yield v/s Home Loan Cost 5.0% 4.0% 3.4% 3.5% 3.9% 3.1% 3.4% 3.2% 2.3% 2.9% 2.6% 2.6% 2.7% 0.42% Rental yield Effective Interest Rate on Home Loans with PMAY (0.42%) Source: NHB; Industry reports Increasing
Slide 15: Growth Momentum in Mid-Income Affordable Housing
Growth Momentum in Mid-Income Affordable Housing • RBI’s All-India House Price Index (HPI), April 3, 2017: House prices hold steady and rise by 2.3% through demonetization phase of Q3 FY17, belying much touted expectations1 https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=40041 • PMO dire
Slide 16: Commercial Office Space Absorption
Commercial Office Space Absorption • Office space leasing at ₹ 50 to ₹ 70 per sq. ft. per month (~ 1 USD) is a lead indicator of housing demand. As a rule of thumb, 100 sq. ft. of office space requires almost 1,000 sq.ft. of residential space • Commercial office space absorption at an all time high
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 20302, and growing trend of nuclear families 88% 81% 41% 26% 29% 17% 20% 9.4% India T
Slide 18: Strong Structural Drivers and Government Focus
Strong Structural Drivers and Government Focus CY2016: Boost to the Housing Sector Pradhan Mantri Subsidy eligibility under Pradhan Mantri Awas Yojana (PMAY) enhanced to cover up to ₹ 12 lakh of Awas Yojana (PMAY) home loan – reduces effective home loan rates to 0.42% for mid-income affordable housi
Slide 19: Mortgage Market Growth
Mortgage Market Growth Growing HFC Market Share in a Steadily Expanding Home Loans Market 17% 19% CAGR HFC CAGR: 22% 12,384 10,650 8,887 40% 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 Mar-16 Banks' Share HFCs' Share (Amounts in ₹ Bn) Rating agency ICRA
Slide 20: No Regulatory Arbitrage: Regulatory Regime for HFCs at par with Banks
No Regulatory Arbitrage: Regulatory Regime for HFCs at par with Banks Parameters HFCs Banks NBFCs NPA Recognition 90 dpd 90 dpd 90 dpd (from FY18) CRAR 12% 9% 15% - Tier 1 6% 6% 7.5% Standard Asset Housing Loans 0.4% 0.4% 0.4% (from FY18) Provisions Others 1% 0.25-1% 0.4% (from FY18) SARFAESI Covera
Slide 21: Financial and Operational Highlights
Financial and Operational Highlights 21
Slide 22: Business Summary
Business Summary • Balance Sheet : ₹ 1.04 Trillion • Loans Outstanding : ₹ 913.01 Bn (March 31, 2017) : (US$ 14.05 Bn) • Loan Assets CAGR (5 years) : 27% • Cumulative Loans given to retail Customers : 919,183 • Cumulative Loans Disbursed till date : ₹ 1.67 Tn (US$ 25.61 Bn) • Cost to Income Ratio (F
Slide 23: Consistent Track Record
Consistent Track Record Balance Sheet Loan Assets Revenue CAGR: 27% CAGR: 29% CAGR: 29% 913 1,037 687 117 764 522 92 572 412 73 444 344 59 322 391 275 38 48 253 198 25 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Slide 24: Balance Sheet Assets
Balance Sheet Assets 2% 18% Loan Book: 80% Cash & Liquid Investments*: 18% Other Assets: 2% 80% Total Assets As at March 31, 2017 ₹ 1.04 Tn (US$ 15.95 Bn) As at March 31, 2016 ₹ 764.4 Bn (US$ 11.76 Bn) *Cash, Cash Equivalents and Investments in Liquid Debt Instruments US $ amounts are converted base
Slide 25: Asset Composition
Asset Composition FY 15-16 FY 16-17 23% 22% 77% 78% Mortgage Loans Corporate Mortgage Loans • Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of ₹ 2.4 Mn; average LTV of 71% (at origination) 25
Slide 26: Asset Quality
Asset Quality As at March 31, 2017 0.85% 0.84% 0.85% (in ₹ Bn) NPA (90+ dpd): 7.77 Provisions for 0.49% 0.49% 0.49% Contingencies: 11.49 Of which 0.36% 0.35% 0.36% NPAs: 4.49 Other provisioning: 7.00 Regulatory Provisioning: 7.75 Mar 15 Mar 16 Mar 17 Excess Provisioning Gross NPA General & Specific
Slide 27: Retail Mortgage Loans' Sourcing
Retail Mortgage Loans' Sourcing 16% 7% 11% 66% Direct Sales Team* External Channels Branch Walk-ins eHome Loans • 20% of home loans’ sourcing is now through eHome Loans • 89% of incremental sourcing is done in-house between on-rolls employees and eHome Loans *Direct Sales Team: on-rolls sales employ
Slide 28: Home Loan Profile: Focus on Mid-Income Affordable Housing
Home Loan Profile: Focus on Mid-Income Affordable Housing Average Loan Size ₹ 2.4 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 • PMAY extended to Middle Income Group
Slide 29: Smart City Home Loan: New Initiative in FY17
Smart City Home Loan: New Initiative in FY17 • 43 new Smart City Home Loan branches have been added in FY17 • 7% of monthly incremental home loans’ applications are being sourced from these branches Minimum Loan Size ₹ 1.0 Mn Average Loan Size ₹ 1.5 Mn Maximum Loan Size ₹ 4.0 Mn Maximum Loan to Valu
Slide 30: 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 31: LAP Grading and Monitoring of Sold Down Pools
LAP Grading and Monitoring of Sold Down Pools A Pioneering Initiative for Improved Risk Management and Greater Transparency 31
Slide 32: 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 LAP loans on aspects such as past payment track record; nature of business and financial performance; nature of prope
Slide 33: 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 34: 8th Report CRISIL LAP Grading: Updated for Q4 FY17
8th Report CRISIL LAP Grading: Updated for Q4 FY17 Grading Segment Characteristics Total Interest Disbursals Outstanding Grading Quality of Service Loan to EBITDA Apr 15 – Liabilities/ Scale LAP Loans# Coverage Value (LTV) Margins Mar17 Total Ratio (ISCR) Networth 99% of incremental LAP1 Highest 9.6
Slide 35: 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 36: 6th Report ICRA LAP Grading: Updated for Q4 FY17
6th Report ICRA LAP Grading: Updated for Q4 FY17 Grading Characteristics Level of credit Grading Grading Scale Median LTV Median FOIR worthiness Distribution Over 99% of LAP1 Excellent 15.6% 26% 33% incremental LAP loans LAP2 Good 65.4% 53% 46% are within the top LAP3 Average 18.7% 65% 58% three gra
Slide 37: Monitoring Report of ₹ 164.6 Bn of Sold Down Portfolio
Monitoring Report of ₹ 164.6 Bn of Sold Down Portfolio – from Rating Agencies CRISIL, ICRA and CARE • CRISIL, a Standard & Poor’s Company, publishes pool performance parameters for 74 of 81 sold down pools • ICRA, a Moody’s Investors Service Company, and CARE publishes pool performance of 7 PTC pool
Slide 38: Monitoring Report of ₹ 164.6 Bn of Sold Down Portfolio
Monitoring Report of ₹ 164.6 Bn of Sold Down Portfolio – from Rating Agencies CRISIL, ICRA and CARE IBHFL’s strong underwriting and portfolio quality is affirmed in the performance of ₹ 164.6 Bn of sold down portfolio as published by CRISIL, ICRA and CARE Initial Pool Details of Initial POS Sold Dow
Slide 39: Home Loans Pool Performance Factsheet: CRISIL
Home Loans Pool Performance Factsheet: CRISIL Direct Assignments (Sold Down) Initial Pool Details of Initial POS Sold Down Sold Down Disbursement Pool Principal Sr. No. Investor Principal MPS Amortisation 90+ dpd % 180+ dpd % CCR MCR Date (₹ Mn) (₹ Mn) (₹ Mn) 1 Bank 1 20-Mar-12 1,679.7 1,587.4 59 51
Slide 40: Home Loans Pool Performance Factsheet: CRISIL
Home Loans Pool Performance Factsheet: CRISIL Direct Assignments (Sold Down) Initial Pool Details of Initial POS Sold Down Sold Down Disbursement Pool Principal Sr. No. Investor Principal MPS Amortisation 90+ dpd % 180+ dpd % CCR MCR Date (₹ Mn) (₹ Mn) (₹ Mn) 20 Bank 7 01-Sep-15 1,380.1 1,288.1 17 7
Slide 41: LAP Pool Performance Factsheet: CRISIL
LAP Pool Performance Factsheet: CRISIL Direct Assignments (Sold Down) Initial Pool Details of Initial POS Sold Down Sold Down Disbursement Pool Principal Sr. No. Investor Principal MPS Amortisation 90+ dpd % 180+ dpd % CCR MCR Date (₹ Mn) (₹ Mn) (₹ Mn) 1 Bank 2 29-Sep-11 3,676.9 3,354.5 65 351.0 90%
Slide 42: Home Loans and LAP Pool Performance Factsheet
Home Loans and LAP Pool Performance Factsheet Pass-Through Certificates Home Loan PTC Pools rated by CRISIL Initial Pool Details of Initial POS Sold Down Sold Down Disbursement Pool Principal Outstanding Sr. No. Investor Principal MPS Amortisation 90+ dpd % 180+ dpd % CCR MCR Date (₹ Mn) (₹ Mn) Rati
Slide 43: Liabilities Profile
Indiabulls HOME LOANS Liabilities Profile 43
Slide 44: Liabilities
Liabilities 12% 6% Share Holders’ Funds: ₹ 121.2 Bn (US$ 1.86 Bn) Borrowings: ₹ 853.0 Bn (US$ 13.1 Bn) Other Liabilities: ₹ 62.8 Bn (US$ 0.97 Bn) 82% Total Liabilities: As of March 31, 2017: ₹ 1.04 Tn (US$ 15.95 Bn) As of March 31, 2016: ₹ 764.4 Bn (US$ 11.76 Bn) US $ amounts are converted based on
Slide 45: Funding Mix
Funding Mix 2% 2% 3% 12% 11% 9% 37% 53% 49% ECB Sell Down Bank Loans 51% 33% 38% Debentures and Securities Mar 15 Mar 16 Mar 17 Total Borrowings: As of March 31, 2017: ₹ 853.0 Bn (US$ 13.12 Bn) As of March 31, 2016 : ₹ 610.9 Bn (US$ 9.40 Bn) US $ amounts are converted based on the exchange rate of U
Slide 46: Strengthening Liability Profile
Strengthening Liability Profile 900 Borrowings (₹ Bn) 853 800 700 611 600 475 Borrowings 500 400 Net Gearing 300 5.9 5.7 200 4.7 Net Gearing: Borrowings Net 100 of ‘Cash & Cash Equivalents’ and ‘Investments in Liquid - Mar 15 Mar 16 Mar 17 Debt Instruments’ Total Funding (₹ Bn) Net Incremental Contr
Slide 47: RoE Maximization through Capital Conservation
RoE Maximization through Capital Conservation Loan Assets (₹ Bn) Cost of Funds Stable Spreads Loan Assets 6-Yr CAGR: 29% Own Book 6-Yr CAGR: 27% 913 9.05% 13.06% 87 12.52% 687 8.80% 11.63% 522 78 8.44% 8.39% 3.28% 3.18% 3.24% 8.06% 62 826 7.83% 609 9.78% 9.34% 460 8.39% Mar 15 Mar 16 Mar 17 Sep 16 D
Slide 48: Optimally Matched Balance Sheet
Optimally Matched Balance Sheet Maturity Profile (As of March 31, 2017) 525 504 360* 355 211 184 Up to 1 yr 1 - 5 yrs Over 5 yrs Assets Liabilities (Amounts in ₹ Bn) • * Assets in the ‘Up to 1 Yr’ bucket includes ₹ 185.02 Bn (as of March 31, 2017) of Cash, Cash equivalents and investments in liquid
Slide 49: e-Home Loans
Indiabulls HOME LOANS = e-Home Loans 49
Slide 50: 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 application form Click-of-button call centre support Loan agr
Slide 51: Enhancing Customer Experience and Convenience
: Enhancing Customer Experience and Convenience OneGO e-Sign Unified Payment Interface Facebook Integration Single e-signature for multiple uploaded Money transfer as easy as sending a text Lead generation through Facebook documents message Application form filling through Facebook Chatbot Replaces
Slide 52: Technology Leveraged Cost-Effective Growth
Technology Leveraged Cost-Effective Growth Reduction in Processing Cost per File and Greater Credit Control • Smart city home loans driven through eHome loans led sourcing and credit appraisal • Within 9 months of launch, 20% of incremental home loans sourced through ‘e-Home Loans’ • End-to-end tech
Slide 53: 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 Gyan
Slide 54: Corporate Social Responsibility
Corporate Social Responsibility 54
Slide 55: Indiabulls Foundation: Corporate Social Responsibility
Indiabulls Foundation: Corporate Social Responsibility Best Overall Excellence in CSR award at National Awards for Excellence in CSR & Sustainability 2016 Health Jan Swastha Kalyan Vahika Scholarship: Education (charitable medical vans): - To over 600 meritorious students - Free check-up - Added 3 v
Slide 56: Distribution Network, Ratings, Key Ratios, Valuations and Shareholding
Distribution Network, Ratings, Key Ratios, Valuations and Shareholding 56
Slide 57: Country Wide Reach
Country Wide Reach Head office Master • Core credit Service committee Branches Centers (MSC) • Loans above pre- • • Walk-in branches • Regional credit hub defined limits go to • • Customer the committee Service • Detailed credit analysis • interaction and • • Centers service delivery • Underwrites h
Slide 58: Credit Ratings
Credit Ratings Long Term Short Term Rating Rating CARE Ratings AAA A1+ Brickwork Ratings AAA AA+ CRISIL (a Standard & Poor’s Company) [Outlook: Positive] A1+ Outlook revised upwards from ‘Stable’ ICRA (an Associate of Moody’s Investor Service) AA+ A1+ India Ratings & Research (a Fitch Group A1+ Comp
Slide 59: Rising Productivity Ratios
Rising Productivity Ratios FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 No. of Employees 4,512 4,243 4,072 4,099 4,840 5,453 6,388 Profit per employee 1.7 2.4 3.1 3.8 3.9 4.3 4.6 (₹ Mn) Asset per employee 37.1 58.5 80.9 108.4 118.2 140.2 162.3 (₹ Mn) Cost-to-Income Ratio 21.0% 18.7% 18.0%
Slide 60: Key Financial Metrics
Key Financial Metrics FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Pre Tax RoAA (%) 5.5% 4.9% 4.9% 4.8% 4.9% 4.9% 4.6% Post Tax RoAA (%) 4.1% 3.7% 3.8% 3.8% 3.7% 3.7% 3.6% RoE (%)^ 17.2% 22% 26% 27% 29% 26% 26% Capital Adequacy 23.87% 19.96% 18.58% 20.47% 19.60% 23.38% 20.91% (%)# - Tier
Slide 61: Valuations and Returns
Valuations and Returns Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Market Price per Share (₹) 154.8 207.1 271.8 285.6 557.9 674.0 989.9* Market Capitalisation 48.1 64.5 84.9 95.4 198.4 284.0 419.6 (₹ Bn) PE Ratio (times) 6.5 6.5 6.8 6.0 10.2 11.3 14.4 Dividend per Share (₹) # 10 13 20 29 35 36
Slide 62: Shareholding Pattern
Shareholding Pattern 8.0% 4.8% 23.6% 63.6% Founder Foreign Institutional Shareholding MFs/Banks/IFI Public MF: Mutual Funds; IFI: Indian Financial Institutions As on 31st March, 2017 62
Slide 63: Detailed Financials
Indiabulls HOME LOANS Detailed Financials
Slide 64: Consolidated Balance Sheet
Consolidated Balance Sheet ₹ 185.02 Bn of Cash & Cash Equivalents and Investments in Liquid Debt Instruments The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 185.02 Bn as at 31st Mar, 2017. The company receives income from its cash, cash equivalents and investme
Slide 65: Consolidated Income Statement
Consolidated Income Statement The company had cash, cash equivalents and investments in liquid debt instruments of ₹ 185.02 Bn as at 31st Mar, 2017. The company receives income from its cash, cash equivalents and investments in liquid debt instruments through the quarter, most of which appears in ‘O
Slide 66: Update on OakNorth Bank
Update on OakNorth Bank • IBHFL bought a 40% stake in OakNorth Bank at £ 80.6 per share in Nov 15 • In April 17, 18 months after IBHFL’s investment, OakNorth Bank raised equity capital at £ 119.4 per share, 50% higher than what IBHFL paid for its stake • Last round investors (family investing entiti
Slide 67: Disclaimer from CRISIL (for Pool Performance Reports)
Disclaimer from CRISIL (for Pool Performance Reports) The Pool Performance Factsheet (“Factsheet”) has been prepared at the request of the Originator – Indiabulls Housing Finance Limited. The Factsheet for pools backed by Pass-Through Certificates (PTCs) and Direct Assignments (DAs) presented in thi
Slide 68: Thank you
Indiabulls HOME LOANS Thank you
Indiabulls Housing Finance — Investor Presentation (May 2017) on 6ix