Arman Financial Services Limited · NSE:ARMANFIN
Arman Financial Services — FY2021 Earnings Presentation
37 slides from Arman Financial Services's earnings presentation, June 2021
Slide 1: Arman Financial Services Ltd. Q4 & FY21 Investor Presentation
INVESTOR PRESENTATION FY19 Arman Financial Services Ltd. Q4 & FY21 - Investor Presentation June 2021
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 – Q4 & FY21 13 Liability Overview 16 Company Overview 24 Product Overview 28 Annexures
Slide 4: Financial Performance Update – Q4 & FY21
Financial Performance Update – Q4 & FY21
Slide 5: Q4 & FY21 – Financial Performance Highlights
Q4 & FY21 – Financial Performance Highlights ✓ Total AUM declined by 5% YoY to INR 8,144 Mn in Q4FY21 vs INR 8591 Mn in Q4FY20 (Q3 FY21 AUM: INR 7,200 Mn) Shareholders Equity Stood at INR 1,867 Mn in Q4 FY21 ✓ Consolidated Debt-Equity Ratio stood at 3.9x on 31 March’21 (exclude direct assignment) ✓
Slide 6: Update on Collections
Update on Collections Update on Collections ❑ Collections have improved significantly across all 3 segments since September 2020 to reach ~94% in March 2021. However, second wave restrictions led to decline in the collection in April and May 2021 • ‘Microfinance’ collections picked-up strongly as th
Slide 7: Update on Liquidity & Disbursements
. Update on Liquidity & Disbursements Update on Liquidity ❑ Healthy Liquidity position with INR ~1,321 Mn in cash/bank balance, liquid investments, and undrawn CC limits ❑ Successfully raised INR 2,080 Mn in Q4FY21 and 3,690 Mn in FY21 ❑ Liquidity position has improved driven by the pick-up in colle
Slide 8: Q4 & FY21 – Consolidated Profit & Loss Statement
Q4 & FY21 – Consolidated Profit & Loss Statement Particulars (INR Mn) Q4 FY21 Q4 FY20 YoY (%) FY21 FY20 YoY (%) Assets Under Management (AUM) 8,144 8,591 -5% 8,144 8,591 -5% Disbursements 2,752 2,292 20% 5,097 8,736 -42% Shareholder’s Equity * 1,868 1,722 8% 1,868 1,722 8% Income from Operations 439
Slide 9: Q4 & FY21 – Consolidated Balance Sheet
Q4 & FY21 – Consolidated Balance Sheet Particulars (in INR Mn) Consolidated Standalone Particulars (in INR Mn) Consolidated Standalone ASSETS Mar-21 Mar-20 Mar-21 Mar-20 LIABILITIES & EQUITY Mar-21 Mar-20 Mar-21 Mar-20 Financial Assets Equity Share capital 85 85 85 85 Cash and cash equivalents 879 5
Slide 10: Q4 FY21 – Microfinance “Namra” Performance Update
Q4 FY21 – Microfinance “Namra” Performance Update ❖ Q4FY21 continued to witness growth in microfinance AUM. Particulars (INR Mn) Q4 FY21 Q4 FY20 YoY (%) FY21 FY20 YoY (%) • The Portfolio has grown from INR 5,487 Mn in Q3 FY21 to INR 6,431 in Q4 Asset Under Management 6,431 6,207 4% 6,431 6,207 4% FY
Slide 11: Q4 FY21 - Microfinance Performance Update
Q4 FY21 - Microfinance Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Total Income (INR Mn) 6,215 6,431 2,297 6,051 390 5,487 356 5,230 1,802 333 332 318 1,473 386 * 0 Q4 FY20 Q1 FY21 Q2 FY21 Q3FY21 Q4 FY21 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21
Slide 12: Q4 FY21 – Microfinance Performance Update
Q4 FY21 – Microfinance Performance Update Yields % and NIM % Cost-to-Income Ratio % 25.6% 24.7% 23.1% 52.9% 52.9% 21.6% 22.0% 43.9% 42.1% 40.9% 15.2% 14.4% 13.3% 10.5% 11.5% Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Yields % NIM % Cost / Income (%) Asset Quality
Slide 13: Q4 FY21 – Standalone Performance Update (2W & MSME)
Q4 FY21 – Standalone Performance Update (2W & MSME) Particulars (INR Mn) Q4 FY21 Q4 FY20 YoY (%) FY21 FY20 YoY (%) Asset Under Management 1,713 2,384 -28% 1,713 2,384 -28% ❖ Standalone AUM stood at INR 1,713 Mn on Mar’21 Disbursements 455 490 -7% 921 2,205 -58% • MSME AUM stood at INR 1,253.6 Mn • 2
Slide 14: Q4 FY21 - MSME Performance Update
Q4 FY21 - MSME Performance Update AUM (INR Mn) Disbursements (INR Mn) Gross Interest Income (INR Mn) 1,433 379 117 118 1,357 108 107 1,253 333 102 1,188 1,169 93 240 55 0 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4FY21 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21* Q4 FY21 Q3 FY20 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 A
Slide 15: Q4 FY21 - 2W Performance Update
Q4 FY21 - 2W Performance Update AUM (INR Mn) Disbursement (INR Mn) Gross Interest Income (INR Mn) 951 57 157 53 823 45 625 37 544 105 459 31 76 65 0* Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Asset Quality # Yields % 25.4%
Slide 16: Liability Overview
nee ‘Liability Overview
Slide 17: Efficient Liability Management
Efficient Liability Management Funding profile is well diversified with increase in share of funds from NCDs & DFIs Q4 FY20 - Borrowing Mix % Q4 FY21 - Borrowing Mix % INR 7,665 Mn * INR 7,450 Mn * 2% Banks & SFBs 2% 15% DFIs (NABARD, MUDRA & SIDBI) 21% 27% 6% 36% NBFC / FI 6% 6% Securitization 7% 1
Slide 18: Lending partners
Lending partners Bank Borrowings Non-Bank Borrowings Securitization Partners NCDs & ECB 22 18
Slide 19: Company Overview
Company Overview
Slide 20: 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 ▪
Slide 21: Business Progression
Business Progression Company Disbursement Despite COVID- Raised PE Expanded to Crosses 100 crosses 750 Cr; incorporated. 19 challenges, funding from Maharashtra, branches across 5 100% Cashless Started bill Launched 2W the company Incofin; MP, UP & states & 3 products; disbursements; discounting & L
Slide 22: Product Snapshot
Product Snapshot • 28 years of existence • Active customer base of 4.0 lakh • Employee strength of 1,660 employees • Completely in-house operations – Sourcing, Credit & Collections Microfinance MSME Loans 2-Wheeler Loans Rural 2W Loans % of Total AUM 79% 15% 6% 1% (in Pilot Stage) LTV Unsecured Cash
Slide 23: 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 24: Technological Initiatives to Strengthen Operations
Technological Initiatives to Strengthen Operations ❖ In FY19, the company launched an integrated mobile interface for its MFI field staff to enable seamless on-boarding of MFI customers by digitizing & standardizing the loan origination and appraisal process. ‘This technology has been successfully i
Slide 25: Strong Growth in AUM & Disbursements
Strong Growth in AUM & Disbursements….. Total AUM (INR Mn) 10000 • Diversified portfolio of 8,144 Mn in Q4 FY21 split between – 10000 9000 • Microfinance: INR 6,431 Mn (79.0%), 8,599 8,144 8000 • MSME Loans: INR 1,254 Mn (15.4%) 8000 17% 6,847 15% 7000 • 2-Wheeler Loans: INR 459 Mn (5.6%) 11% 6% • 6
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: 37% CAGR: 36% 6.7% 2,152 Demonetization 1,933 28.7% 28.3% 27.4% 1,411 1,276 2
Slide 27: Shareholding Pattern
Shareholding Pattern SHAREHOLDING – 31st March 2021 Promoters, 27.5% Public, 50.3% 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.
Slide 28: Product Overview
MSME EOANS )S Product Overview
Slide 29: Product Overview: Microfinance
Product Overview: Microfinance Product Overview FY21 – Key Metrics (Mn) ▪ JLG model with small ticket loans (Avg. Ticket Size – INR 6,431 4,176 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 FY21 – Key Metrics (Mn) ▪ Hypothecation (secured) loans given to self-employed / cash- 459 246 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 3 states – Gujarat, MP & Maharashtra, with 35 branches • Feet-on-Stre
Slide 32: Group – CFO
Vivek Modi Group – CFO Pushpa Mani/Chintan Mehta Arman Financial Services Ltd Dickenson World Tel : + 91 79 4050 7000 (Extn. 210) Tel : +91 9911684123 / 9892183389 Email : vivek@armanindia.com Email : armanfinancial@dickensonworld.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 3.0 900.0 800.0 Demonetization 2.24 2.32 6,431 Demonetization 6,207 2.5 700.0 2.0 1.70 600.0 4,837 500.0 1.5 1.13 400.0 3,170 0.74 653 1.0 590 300.0 400 418 200.0
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% 6% 1% 61% 7% 9% 5% 21% 20% 56% 17% 18% 18% 48% 13% 43% 45% 21% 21% 18% 21% 27% 72% 25% 27% 44% 31% 27% 27% FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20
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 25.7% 25.5% 30.0% 24.9% 23.9% 24.4% 800.0 25.0% COVID-19 600.0 20.0% 1,017 955 15.0% 18.4% 900 15.6% 16.5% 400.0 738 10.0% 14.8% 14.0% 200.0 459 5.0% 0.0% 0.0 FY17 FY18 FY19 FY20 F
Slide 37: MSME Loans: 5-Year Performance
MSME Loans: 5-Year Performance Disbursement Growth AUM Growth 3500 33000 1,433 30000 3000 27000 24,586 1,254 2500 992 24000 21000 2000 18000 16,284 11,246 15000 1500 12000 9,756 461 1000 9000 1,362 1,054 6000 978 500 61 3000 527 674 0 64 0 FY17 FY18 FY19 FY20 FY21 FY17 FY18 FY19 FY20 FY21 Arman MSME
Arman Financial Services — FY2021 Earnings Presentation on 6ix