Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — FY2019 Earnings Presentation
51 slides from Mahindra & Mahindra Financial Services's earnings presentation, Apr 25, 2019
Slide 1: Cover letter to stock exchanges
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 24th April, 2019 The General Manager-Department of The Manager-Listing Department, Corporate Services,
Slide 2: FY 2019 Result Update
Mahindra & Mahindra Financial Services Limited FY 2019 Result Update March - 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:+91
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 830 billion)*, India‟s largest tractor and utility vehicle manufacturer About MMFSL: MMFSL (Mcap: Rs 268 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 88.75%(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% Mahi
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 March, 2019)
Shareholding Pattern (as on 31st March, 2019) Shareholding Pattern Chart Top 10 Public Shareholders HDFC Life Insurance Company Limited 7.93% Blackrock Global Funds - Asian Growth Leaders Fund 13.64% Blackrock Global Funds Asian Dragon Fund Kotak Funds - India Midcap Fund 51.19% Valiant Ma
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: Long term growth potential
Auto Industry: Long term growth potential Expansion in Addressable market with Low Cost of Ownership Decile-wise penetration (Urban versus Rural) (Mn) 55% 350 326 44.5% 45% 292 300 255 35% 250 224 200 25% 18.6% 141 150 15% 10.0% 100 67 3.0% 4.5% 5.5% 6.0% 5% 0.4% 0.8% 1.7% 11.3% 50 28 37 16 4.0% 0 -
Slide 10: Passenger Vehicles Industry: Overall Demand Drivers
Passenger Vehicles Industry: Overall Demand Drivers FY 08 – FY13 FY 13 – FY 18 FY 18 – FY 23 (P) Small cars and UV expected to continue growth Small Cars 11% 4% 5% – 7% as more households come under parameters, improving economic scenario, positive rural Large Cars 3% (5%) (2%) – (4%) sentiments
Slide 11: Commercial Vehicles Industry: Overall Demand Drivers
Commercial Vehicles Industry: Overall Demand Drivers Lower finance availability hurting MHCV sales. CV FY 08 – FY 13 FY 13 – FY 18 FY 18 – FY 23 (P) lending rates increased marginally MHCV (1%) 7% 6% – 8% Reduction in sale price of second hand vehicles resulting in slower buying of new vehicles
Slide 12: Tractors Industry: Overall Demand Drivers
Tractors Industry: Overall Demand Drivers FY 2016 FY 2017 FY 2018 FY 2019 (P) FY 2020 (P) FY 18 – FY 23 (P) Volume Growth Volume Growth Volume Growth Growth Growth Growth Tractors 493,764 (10%) 582,844 18% 711,478 22% 10% - 12% 6% - 8% 7% – 9% Long term growth of 7-9% over 5 years even after consi
Slide 13: Auto Industry Volume
Auto Industry Volume Domestic Sales FY19 FY18 Y-o-Y FY17 (Volume in „000) (Nos.) (Nos.) Growth (%) (Nos.) Passenger Vehicles (PVs) Passenger Cars / Vans 2,219 2,174 2% 2,103 UV‟s 1,159 1,115 4% 944 Commercial Vehicles (CVs) M&HCVs 391 341 15% 302 LCVs 617 516 20% 412 Three Wheelers 701 636 10% 512 T
Slide 14: Automobile Finance Market: 5 years Projected Growth
Automobile Finance Market: 5 years Projected Growth@15-17% Segment-wise growth in disbursement FY 13 (Rs. Bn.) CAGR FY 13 – FY 18 FY 18 (Rs. Bn.) CAGR FY 18 – FY 23 FY 23 (Rs. Bn.) Passenger vehicle 639 8% 959 15% 1,929 Commercial vehicle 452 8% 652 13% 1,179 Two wheelers 123 17% 270 16% 575 Three w
Slide 15: Housing Finance Growth
Housing Finance Growth Rs. Tn. Housing Portfolio 25 Banks HFCs Growth momentum in the sector expected to slow down 20 22.0 especially for HFC‟s. However, demand side fundamentals 16.0 remain strong. 14.8 15 HFC's 5 Year CAGR 11.8 18%-19% Affordable housing a new growth engine. PSL enhancement 10
Slide 16: Business Strategy
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 15
Slide 17: 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 18: Extensive Branch Network
Extensive Branch Network Extensive branch network with presence in 27 states and 5 union territories in India through 1,321 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 1,284 1,321 1,182 893 547 436 256 Mar'05 Mar'08 Mar'11 Mar'14 Ma
Slide 19: 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 20: Break down of estimated value of Assets Financed
Break down of estimated value of Assets Financed Year ended Year ended Year ended Asset Class March – 19 March – 18 March – 17 Auto/ Utility vehicles 25% 26% 28% Tractors 18% 18% 19% Cars 20% 20% 22% Commercial vehicles and Construction equipments 19% 13% 11% Pre-owned vehicles 14% 14% 13% SME and O
Slide 21: Break down of AUM
Break down of AUM As on As on As on Asset Class March – 19 March – 18 March – 17 Auto/ Utility vehicles 26% 27% 30% Tractors 17% 17% 17% Cars 21% 22% 23% Commercial vehicles and Construction equipments 18% 14% 13% Pre-owned vehicles 9% 8% 9% SME and Others 9% 12% 8% As on 31st March 19, ~43% of the
Slide 22: Break down by Geography
Break down by Geography Central CENTRAL West WEST 10% 10% 17% 16% East EAST Loan Assets 25% SOUTH Disbursement 25% South as on March, 2019 For FY2019 20% 19% North NORTH 28% 30% NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan, Uttar Pradesh, Uttaranchal; EAS
Slide 23: 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 IND AAA Stable Short term debt IND A1+ -- CARE Ratings Outlook Long term and Subordinated debt CARE AAA Stab
Slide 24: Broad Based Liability Mix
Broad Based Liability Mix Working Capital Consortium Facility enhanced to Rs. 20,000 mn. comprising several banks Funding Mix by Investor profile (Mar’19) Funding Mix by type of Instrument (Mar’19) Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share Banks 246,604 46.4% NC
Slide 25: ALM Position
ALM Position Cumulative Mismatch Cumulative Surplus (%) - Positive (INR cr.) 14,000 120.0% 12,057 12,000 100.0% 10,000 9,301 80.0% 8,240 8,000 5,084 6,523 6,582 60.0% 6,000 5,094 40.0% 4,000 2,000 20.0% - 0.0% Upto Upto Upto Upto Upto Upto Upto 1 month 2 months 3 months 6 months 1 year 3 years 5 yea
Slide 26: 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 27: Financial Information
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 26
Slide 28: Disclaimer
Disclaimer This is the first financial year of Indian Accounting Standards (“IND-AS”) for the purposes of the Company’s financial reporting. The impact of the transition from previous GAAP (“I-GAAP”) has been made in the opening reserves of FY 2018 Except the full year account’s (FY19) which h
Slide 29: Key Financials
Key Financials Figures on standalone basis Total Income Profit after Tax Value of Asset Financed Q4 FY 19 Rs. 24,795 mn Rs. 5,880 mn Rs. 117,257 mn 37% 87% -1% Q4 FY 18 Rs. 18,077 mn Rs. 3,144 mn Rs. 118,610 mn FY 19 Rs. 88,098 mn Rs. 15,571 mn Rs. 462,103 mn 32% 45% 22% FY 18 Rs. 66,852 mn Rs. 10,7
Slide 30: Key Financials (Consolidated)
Key Financials (Consolidated) Total Income Profit after Tax Value of Asset Financed FY 19 Rs. 104,309 mn Rs. 18,673 mn Rs. 487,914 mn 32% 54% 20% FY 18 Rs. 79,122 mn Rs. 12,163 mn Rs. 405,621 mn * As per IND-AS 29
Slide 31: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) I-GAAP IND-AS I-GAAP IND-AS 88.10 612.50 510.04 72.06 485.47 66.85 59.05 62.38 423.56 366.62 FY16 FY17 FY18 FY18 FY19 FY16 FY17 FY18 FY18 FY19 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) I-GAAP IND-AS
Slide 32: Financial Performance
Financial Performance Figures 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% 42.9% 39.7% 39.8% 1.8% 1.9% 38.0% 36.1% 1.0% FY16 FY17 FY18 FY18 FY19 FY16 FY17 FY18 FY18 FY19 Return on Net Worth (RONW) (%) Asset Quality I-GAAP IND-A
Slide 33: Standalone Profit & Loss Account: IND-AS
Standalone Profit & Loss Account: IND-AS Accounting Basis As per IND-AS Particulars (Rs. in Million) Q4FY19 Q3FY19 Q-o-Q Q4FY18 Y-o-Y Revenue from operations 24,552 22,304 10.1% 17,968 36.6% Less: Finance cost 11,443 10,205 12.1% 7,779 47.1% NII 13,109 12,099 8.3% 10,189 28.7% Other Income 243 157 5
Slide 34: Standalone Profit & Loss Account: IND-AS
Standalone Profit & Loss Account: IND-AS Accounting Basis As per IND-AS Particulars (Rs. in Million) FY 19 FY 18 Y-o-Y Revenue from operations 87,229 66,334 31.5% Less: Finance cost 39,445 30,816 28.0% NII 47,784 35,518 34.5% Other Income 869 517 68.0% Total Income 48,653 36,035 35.0% Employee benef
Slide 35: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Mar 31, 2019 As on Mar 31, 2018 ASSETS Financial Asset a) Cash and cash equivalents 5,017 2,719 b) Bank balance other than (a) above 4,568 1,392 c) Derivative financial instruments 100 4 d) Trade Receivables 52 37 e) Loans 612,496 485,470 f
Slide 36: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in Million) As on Mar 31, 2019 As on Mar 31, 2018 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 770 261 b) Payables i) Trade payables 9,795 10,554 ii) Other payables 342 - c) Debt Securities 223,194 203,451 d) Borr
Slide 37: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Particulars (Rs. in Million) FY19 FY18 Y-o-Y Revenue from operations 103,717 78,839 31.6% Less: Finance cost 44,323 34,362 29.0% NII 59,394 44,477 33.5% Other Income 592 283 108.8% Total Income 59,986 44,760 34.0% Employee benefits expense 14,779 11,366 30.0% Provi
Slide 38: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in Million) As on Mar 31, 2019 As on Mar 31, 2018 ASSETS Financial Asset a) Cash and cash equivalents 5,372 3,387 b) Bank balance other than (a) above 4,568 1,392 c) Derivative financial instruments 100 4 d) Trade Receivables 536 564 e) Loans 689,390 545,4
Slide 39: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in Million) As on Mar 31, 2019 As on Mar 31, 2018 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 770 261 b) Payables i) Trade payables 11,143 11,314 ii) Other payables 342 68 c) Debt Securities 247,159 219,444 d)
Slide 40: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis As per IND-AS Year ended Year ended Particulars (Rs. in Million) March – 19 March – 18 RONW (Avg. Net Worth) ^ 15.2% 13.3% Debt / Equity 4.84:1 4.17:1 Capital Adequacy$ 20.3% 22.7% Tier I 15.5% 17.0% Tier II 4.8% 5.7% EPS (Basic) (Rs.) 25.33 18.52 Boo
Slide 41: Spread Analysis
Spread Analysis Figures on standalone basis As per IND-AS Year ended Year ended Particulars (Rs. in Million) March – 19 March – 18 Total Income / Average Assets 14.7% 13.9% Interest / Average Assets 6.6% 6.4% Gross Spread 8.1% 7.5% Overheads / Average Assets 3.1% 2.9% Write offs & NPA provisions / A
Slide 42: NPA Analysis (As per IND-AS)
NPA Analysis (As per IND-AS) Figures on standalone basis As on Mar 31, 2019 As on Mar 31, 2018 Total Assets (including Provisions) 689,410 557,826 Gross NPA (Stage 3) 40,602 50,419 Less: ECL Provisions (Stage 3) 7,799 17,161 Net NPA (Stage 3) 32,803 33,258 Gross NPA % (Stage 3) 5.9% 9.0% Net NPA % (
Slide 43: Key Subsidiaries
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 42
Slide 44: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Accounting Basis As per IND-AS Year ended Year ended Particulars (Rs. million) March – 19 March – 18 Loans disbursed 25,811 27,892 No. of Customer Contracts (nos.) 171,187 218,572 Outstanding loan book 76,892 60,025 Total income 13,839 10,348 PBT 3,662 2,412 PA
Slide 45: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Accounting Basis As per IND-AS Year ended Year ended Particulars (Rs. million) March – 19 March – 18 No. of Policies for the Period (nos.) 2,265,146 2,058,613 Net Premium 19,238 17,490 Total income 3,234 2451 PBT 1,029 812* PAT 715 522 No. of employees (nos.) 1,097
Slide 46: Awards & Accolades
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 45
Slide 47: Awards and Accolades
Awards and Accolades ■ Mahindra Finance has been ranked at 11th among the Best Large Workplaces in the Asia’s Best Workplaces 2019 list by The Great Place to Work Institute® ■ Mahindra Finance has been has been recognized in the list of 20 Best Workplaces in BFSI – 2019 in India by The Great Place t
Slide 48: Risk Management Policies
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 47
Slide 49: 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 PD – Probability of Default; LGD – Loss given Defau
Slide 50: 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 51: Thank You
Thank You Transforming rural lives across the country 50
Mahindra & Mahindra Financial Services — FY2019 Earnings Presentation on 6ix