Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q3 FY2020 Earnings Presentation
47 slides from Mahindra & Mahindra Financial Services's earnings presentation, Jan 28, 2020
Slide 1: Cover letter to stock exchanges on investor presentation
Mahindra & Mahindra MahindraFINANCE 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 28th January, 2020 The General Manager-Department of The Manager-Listing Department, Corporate Services,
Slide 2: Quarter Result Update December 2019
Mahindra & Mahindra Financial Services Limited Quarter Result Update December - 2019 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 66526000 Fax:
Slide 3: Transforming rural lives across the country
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 2
Slide 4: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 719 billion)*, India’s largest tractor and utility vehicle manufacturer About MMFSL: MMFSL (Mcap: Rs 218 billion)*, one of India’s leading non-banking fin
Slide 5: MMFSL Group structure
MMFSL Group structure (1) 80% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 98.43%(2) Mahindra Rural Housing Finance Limited (“MRHFL”) 51.19% 49% Mahindra Finance USA LLC (Joint venture with Rabobank group subsidiary) Mahindra & Mahindra Financial Services Limited 100%(3) M
Slide 6: Our Journey
Our Journey Commenced housing finance Maiden Retail NCD Issue Raised Rs. 2147 Long term debt rating business through MRHFL Maiden QIP Issue of Rs. 4.26 Bn of Rs. 1000 crores. crores from upgraded to AAA by Oversubscribed over 7 Tranche 1 of the India Ratings and Raised Rs. 4.14 Bn through JV with Ra
Slide 7: Shareholding Pattern (as on 31st December, 2019)
Shareholding Pattern (as on 31st December, 2019) Shareholding Pattern Top 10 Public Shareholders 8.20% HDFC Life Insurance Company Limited Life Insurance Corporation Of India Kotak Funds - India Midcap Fund 15.36% Valiant Mauritius Partners Offshore Limited 51.19% Blackrock Global Funds As
Slide 8: Industry Overview
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 7
Slide 9: Auto Industry Volume
Auto Industry Volume Domestic Sales 9MFY20 9MFY19 Y-o-Y FY19 FY18 Y-o-Y (Volume in ‘000) (Nos.) (Nos.) Growth (%) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 1,294 1,690 (23%) 2,219 2,174 2% UV’s 824 843 (2%) 1,159 1,115 4% Commercial Vehicles (CVs) M&HCVs 176 278 (37%) 3
Slide 10: Automobile Finance Market: 5 years Projected Growth
Automobile Finance Market: 5 years Projected Growth Segment-wise growth in disbursement FY 14 (Rs. Bn.) CAGR FY 14 – FY 19 FY 19 (E) (Rs. Bn.) CAGR FY 19 – FY 24 FY 24 (P) (Rs. Bn.) Passenger vehicle 696 8% 1,012 7% - 9% 1,486 Commercial vehicle 351 18% 820 6% - 8% 1,133 Two wheelers 140 17% 302 10%
Slide 11: Housing Finance Growth
Housing Finance Growth Rs. Tn. Housing Portfolio 30 Banks HFCs HFC's 5 Year CAGR Growth momentum in the sector expected to slow 24.2 18%-19% 25 down. However, demand side fundamentals remain 20 strong. 14.8 16.0 15 Share of loans from Banks to increase over the 11.8 medium term. Liquidity concer
Slide 12: Business Strategy
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 11
Slide 13: 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 14: Extensive Branch Network
Extensive Branch Network Extensive branch network with presence in 28 states and 5 union territories in India through 1,326 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 1,284 1,321 1,326 1,182 893 547 436 256 Mar'05 Mar'08 Mar'11 Mar
Slide 15: 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 Loans for varied purposes like project fina
Slide 16: Break down of estimated value of Assets Financed
Break down of estimated value of Assets Financed on standalone basis Nine months ended Nine months ended Year ended Asset Class December – 19 December – 18 March – 19 Auto/ Utility vehicles 27% 24% 25% Tractors 17% 19% 18% Cars 19% 20% 20% Commercial vehicles and Construction equipments 16% 18% 19%
Slide 17: Break down of AUM
Break down of AUM on standalone basis As on As on As on Asset Class December – 19 December – 18 March – 19 Auto/ Utility vehicles 27% 26% 26% Tractors 17% 17% 17% Cars 21% 21% 21% Commercial vehicles and Construction equipments 18% 17% 18% Pre-owned vehicles 10% 9% 9% SME and Others 7%* 10% 9% As on
Slide 18: Break down by Geography
Break down by Geography on standalone basis WEST CENTRAL WEST CENTRAL 15% 10% 13% 12% EAST SOUTH EAST SOUTH Loan Assets Disbursement 26% 20% 24% 20% as on Dec, 2019 For 9MFY2020 NORTH NORTH 29% 31% NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan, Uttar Prade
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 IND AAA Long term (including MLD) and Subordinated debt Stable IND PP-MLD AAA emr Short term debt IND A1+ -- CARE Ratings Outlook Long term
Slide 20: Broad Based Liability Mix
Broad Based Liability Mix on standalone basis Working Capital Consortium Facility enhanced to Rs. 20,000 mn. comprising several banks Funding Mix by Investor profile (Dec’19) Funding Mix by type of Instrument (Dec’19) Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share Ba
Slide 21: ALM Position
ALM Position Cumulative Mismatch Cumulative Surplus (%) - Positive (INR cr.) 14,000 70% 12,624 12,000 60% 10,000 9,174 50% 7,918 8,000 40% 6,263 6,000 30% 3,840 4,000 3,331 20% 2,109 2,000 10% - 0% Upto Upto Upto Upto Upto Upto Upto 1 month 2 months 3 months 6 months 1 year 3 years 5 years As on 31s
Slide 22: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Training programs for employees on regular basis All our offices are connected to the centralised data centre in Mumbai through Lease line/HHD 5 days induction program on product knowledge, bus
Slide 23: Financial Information
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 22
Slide 24: Key Financials
Key Financials on standalone basis Total Income Profit after Tax Value of Asset Financed Q3 FY 20 Rs. 26,160 mn Rs. 3,653 mn Rs. 127,811 mn 16% 15% 4% Q3 FY 19 Rs. 22,461 mn Rs. 3,187 mn Rs. 132,904 mn 9M FY 20 Rs. 75,694 mn Rs. 6,855 mn Rs. 331,264 mn 20% % 29% 4% 9M FY 19 Rs. 63,309 mn Rs. 9,691 m
Slide 25: Key Financials (Consolidated)
Key Financials (Consolidated) on consolidated basis Total Income Profit after Tax Value of Asset Financed Q3 FY 20 Rs. 30,813 mn Rs. 4,749 mn Rs. 132,182 mn 14% 16% 2% Q3 FY 19 Rs. 27,055 mn Rs. 4,094 mn Rs. 134,652 mn 9M FY 20 Rs. 88,562 mn Rs. 8,469 mn Rs. 345,916 mn 18% % 27% 5% 9M FY 19 Rs. 75,2
Slide 26: Growth Trajectory
Growth Trajectory on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) I-GAAP IND-AS I-GAAP IND-AS 654.94 88.10 612.50 582.67 72.06 75.69 510.04 485.47 66.85 62.38 63.30 423.56 FY17 FY18 FY18 FY19 9MFY19 9MFY20 FY17 FY18 FY18 FY19 9MFY19 9MFY20 Profit after Tax (1) (Rs. Bn) Book Value Per Share
Slide 27: Financial Performance
Financial Performance on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) I-GAAP IND-AS I-GAAP IND-AS 2.6% 2.2% 2.2% 42.9% 39.7% 39.8% 39.7% 1.9% 38.0% 36.6% 1.3% 1.0% FY17 FY18 FY18 FY19 9MFY19 9MFY20 FY17 FY18 FY18 FY19 9MFY19 9MFY20 Return on Net Worth (RONW) (%) Asset
Slide 28: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in Million) Q3FY20 Q2FY20 Q-o-Q Q3FY19 Y-o-Y FY19 Revenue from operations 25,806 24,864 4% 22,304 16% 87,229 Less: Finance cost 12,088 12,022 1% 10,205 18% 39,445 NII 13,718 12,842 7% 12,099 13% 47,784 Other Income 354 545 -35% 157 125% 869 Total Inc
Slide 29: Standalone Profit & Loss Account
Standalone Profit & Loss Account Nine months ended Nine months ended Particulars (Rs. in Million) Y-o-Y FY 19 Dec – 19 Dec – 18 Revenue from operations 74,610 62,684 19% 87,229 Less: Finance cost 35,393 28,002 26% 39,445 NII 39,217 34,682 13% 47,784 Other Income 1,084 625 73% 869 Total Income 40,301
Slide 30: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Dec 31, 2019 As on Dec 31, 2018 As on Mar 31, 2019 ASSETS Financial Asset a) Cash and cash equivalents 3,685 4,129 5,017 b) Bank balance other than (a) above 7,140 3,318 4,568 c) Derivative financial instruments 129 222 100 d) Trade Receiva
Slide 31: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in Million) As on Dec 31, 2019 As on Dec 31, 2018 As on Mar 31, 2019 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 425 - 770 b) Payables i) Trade payables 8,288 10,017 9,795 ii) Other payables 278 - 342 c) Debt Sec
Slide 32: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Nine months ended Nine months ended Particulars (Rs. in Million) Y-o-Y FY19 Dec – 19 Dec – 18 Revenue from operations 87,820 74,917 17% 103,717 Less: Finance cost 39,599 31,624 25% 44,323 NII 48,221 43,293 11% 59,394 Other Income 743 368 102% 592 Total Income 48,96
Slide 33: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in Million) As on Dec 31, 2019 As on Dec 31, 2018 As on Mar 31, 2019 ASSETS Financial Asset a) Cash and cash equivalents 4,014 4,523 5,372 b) Bank balance other than (a) above 7,140 3,318 4,568 c) Derivative financial instruments 129 222 100 d) Trade Recei
Slide 34: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in Million) As on Dec 31, 2019 As on Dec 31, 2018 As on Mar 31, 2019 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 425 - 770 b) Payables i) Trade payables 9,294 11,188 11,143 ii) Other payables 278 - 342 c) Debt
Slide 35: Summary & Key Ratios
Summary & Key Ratios on standalone basis As per IND-AS Nine months ended Nine months ended Year ended Particulars Dec – 19 Dec – 18 March – 19 RONW (Avg. Net Worth) 8.3% 13.0% 15.2% Debt / Equity 5.28:1 4.83:1 4.84:1 Capital Adequacy$ 19.6% 19.4% 20.3% Tier I 15.4% 14.7% 15.5% Tier II 4.2% 4.7% 4.8%
Slide 36: Spread Analysis
Spread Analysis on standalone basis As per IND-AS Nine months ended Nine months ended Year ended Particulars Dec – 19 Dec – 18 March – 19 Total Income / Average Assets 14.4% 14.6% 14.7% Interest / Average Assets 6.7% 6.5% 6.6% Gross Spread 7.7% 8.1% 8.1% Overheads / Average Assets 3.0% 3.0% 3.1% Wri
Slide 37: NPA Analysis (As per IND-AS) - on Business Assets
NPA Analysis (As per IND-AS) - on Business Assets on standalone basis Particulars (Rs. in Million) except figures in % Dec 31, 2019 Dec 31, 2018 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Business Assets (including Provisions) 680,179 606,999 660,584 648,200 631,164 Gross NPA (Stage 3) 57,733 50,645 52,
Slide 38: NPA Analysis (As per IND-AS) – on Total Assets
NPA Analysis (As per IND-AS) – on Total Assets on standalone basis Particulars (Rs. in Million) except figures in % Dec 31, 2019 Dec 31, 2018 Mar 31, 2019 Total Assets (including Provisions) 758,844 655,754 689,476 Gross NPA (Stage 3) 57,733 50,645 40,706 Less: ECL Provisions (Stage 3) 13,214 13,611
Slide 39: Key Subsidiaries
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 38
Slide 40: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Accounting Basis As per IND-AS Nine Months ended Nine Months ended Year ended Particulars (Rs. million) except figures in % December – 19 December – 18 March – 19 Loans disbursed 14,652 17,767 25,811 No. of Customer Contracts (nos.) 74,050 114,776 171,187 Outst
Slide 41: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Accounting Basis As per IND-AS Nine Months ended Nine Months ended Year ended Particulars (Rs. million) December – 19 December – 18 March – 19 No. of Policies for the Period (nos.) 1,698,407 1,669,594 2,265,146 Net Premium 14,890 12,902 19,238 Total income 2,490 2,
Slide 42: Awards & Accolades
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 41
Slide 43: Awards and Accolades
Awards and Accolades ■ Global Corporate Sustainability Award in the award category: Reporting, Emerging Market at Taipei, Taiwan ■ Ranked 49th amongst Top 100 Indian companies for Sustainability & CSR under Responsible Business Rankings 2019 by Futurescape. ■ Ranked 8th Rank, in the India’s Best Com
Slide 44: Risk Management Policies
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 43
Slide 45: 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* *Fair valued at reporting date PD – Probability of
Slide 46: 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 47: Thank You
Thank You Transforming rural lives across the country 46
Mahindra & Mahindra Financial Services — Q3 FY2020 Earnings Presentation on 6ix