Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — FY2020 Earnings Presentation
48 slides from Mahindra & Mahindra Financial Services's earnings presentation, May 15, 2020
Slide 1: Cover letter to stock exchanges: Investors/Analysts Presentation
Mahindra & Mahindra 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 15th May, 2020 The General Manager-Department of The Manager-Listing Department, Corporate Services, National Stock Ex
Slide 2: FY 2020 Result Update
Mahindra & Mahindra Financial Services Limited FY 2020 Result Update March - 2020 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 498 billion)*, India’s largest tractor and utility vehicle manufacturer About MMFSL: MMFSL (Mcap: Rs 104 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) 51%(3) Mahindra Asset Management Company Pvt. Mahindra &
Slide 6: Our Journey
Our Journey Commenced housing finance Maiden Retail NCD Issue business through MRHFL Maiden QIP Issue of Rs. 4.26 Bn of Rs. 1000 crores. Oversubscribed over 7 Raised Rs. 4.14 Bn through JV with Rabobank subsidiary for times over base issue size Private Equity tractor financing in USA Long term debt
Slide 7: Shareholding Pattern (as on 31st March, 2020)
Shareholding Pattern (as on 31st March, 2020) Shareholding Pattern Top 10 Public Shareholders 8.93% HDFC Life Insurance Company Limited Life Insurance Corporation Of India Kotak Funds - India Midcap Fund 15.55% Valiant Mauritius Partners Offshore Limited 51.19% Government Pension Fund Glob
Slide 8: 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 7
Slide 9: Auto Industry Volume
Auto Industry Volume Domestic Sales FY20 FY19 Y-o-Y FY18 (Volume in ‘000) (Nos.) (Nos.) Growth (%) (Nos.) Passenger Vehicles (PVs) Passenger Cars / Vans 1,698 2,219 (23%) 2,174 UV’s 1,075 1,159 (7%) 1,115 Commercial Vehicles (CVs) M&HCVs 225 391 (42%) 341 LCVs 493 617 (20%) 516 Three Wheelers 637 70
Slide 10: Automobile Finance Market: 5 years Projected Growth
Automobile Finance Market: 5 years Projected Growth Segment-wise growth in disbursement FY 14 CAGR FY 19 FY 20 (P) FY 21 (P) CAGR FY 24 (P) (Rs. Bn.) FY 14 – FY 19 (Rs. Bn.) (Rs. Bn.) (Rs. Bn.) FY 19 – FY 24 (P) (Rs. Bn.) Passenger vehicle 696 8% 1,012 873 633 (2%) - 0% 959 Commercial vehicle 351 19
Slide 11: Housing Finance Growth
Housing Finance Growth Housing Portfolio Housing credit growth expected to slow down post Covid-19. HFCs Banks Rs. Tn. Expect credit outstanding to grow by 3% in FY 21 25 21.2 20 18.4 Share of loans from Banks to increase further with liquidity constraints restricting growth of HFCs 15 13.8 9.9
Slide 12: 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 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 1,322 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of 1,182 1,284 1,321 1,322 893 547 436 256 Mar'05 Mar'08 Mar'11 Mar
Slide 15: Branches Operating (as of May 13, 2020)
Branches Operating (as of May 13, 2020) 450 50% 47% 44% 375 40% 40% 300 34% 30% 28% 225 20% 150 10% 75 0 0% Central East North South West Total Branches Branches Re-Opened % Re-Opened Approximately 500 branches are operating and is widely spread pan-India We expect to re-open over 200 further br
Slide 16: 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 17: 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 18: Break down of estimated value of Assets Financed
Break down of estimated value of Assets Financed on standalone basis Year ended Year ended Year ended Asset Class March – 20 March – 19 March – 18 Auto/ Utility vehicles 28% 25% 26% Tractors 17% 18% 18% Cars 19% 20% 20% Commercial vehicles and Construction equipments 15% 19% 13% Pre-owned vehicles 1
Slide 19: Break down of Business Assets
Break down of Business Assets on standalone basis As on As on As on Asset Class March – 20 March – 19 March – 18 Auto/ Utility vehicles 27% 26% 27% Tractors 17% 17% 17% Cars 21% 21% 22% Commercial vehicles and Construction equipments 19% 18% 14% Pre-owned vehicles 10% 9% 8% SME and Others 6%* 9% 12%
Slide 20: Break down by Geography
Break down by Geography on standalone basis WEST CENTRAL 10% WEST CENTRAL 15% 12% 14% EAST SOUTH Loan Assets SOUTH EAST 26% Disbursement 20% as on Mar, 2020 19% For FY2020 24% NORTH NORTH 29% 31% NORTH: Chandigarh, Delhi, Haryana, Himachal Pradesh, Jammu and Kashmir, Punjab, Rajasthan, Uttar Pradesh
Slide 21: 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 22: Broad Based Liability Mix
Broad Based Liability Mix on standalone basis Working Capital Consortium Facility at Rs. 20,000 mn. comprising several banks Funding Mix by Investor profile (Mar’20) Funding Mix by type of Instrument (Mar’20) Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share Banks/ NCDs
Slide 23: ALM Position and Liability Maturity
ALM Position and Liability Maturity All figures in INR billion 140 250% Cumulative Mismatch Cumulative Surplus (%) 124.4 120 - Positive (INR bn.) 200% 96.6 100 74.3 150% 80 58.3 60 100% 45.4 40 29.3 31.1 50% 20 - 0% Upto Upto Upto Upto Upto Upto Upto 1 month 2 months 3 months 6 months 1 year 3 years
Slide 24: 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 23
Slide 25: Key Financials
Key Financials on standalone basis Total Income Profit after Tax Value of Asset Financed Q4 FY 20 Rs. 26,758 mn Rs. 2,209 mn Rs. 92,618 mn 8% 62% 21% Q4 FY 19 Rs. 24,795 mn Rs. 5,880 mn Rs. 117,257 mn FY 20 Rs. 102,451 mn Rs. 9,064 mn Rs. 423,882 mn 16% % 42% 8% FY 19 Rs. 88,098 mn Rs. 15,571 mn Rs.
Slide 26: Key Financials (Consolidated)
Key Financials (Consolidated) on consolidated basis Total Income Profit after Tax Value of Asset Financed Q4 FY 20 Rs. 31,402 mn Rs. 2,389 mn Rs. 96,730 mn 8% 66% 23% Q4 FY 19 Rs. 29,024 mn Rs. 7,006 mn Rs. 125,300 mn FY 20 Rs. 119,965 mn Rs. 10,858 mn Rs. 442,646 mn 15% 42% 9% % FY 19 Rs. 104,309 m
Slide 27: Growth Trajectory
Growth Trajectory on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) I-GAAP IND-AS I-GAAP IND-AS 649.93 102.45 612.50 88.10 510.04 485.47 423.56 72.06 66.85 62.38 FY17 FY18 FY18 FY19 FY20 FY17 FY18 FY18 FY19 FY20 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) I-GAAP IND-AS I-GAAP
Slide 28: 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% 42.9% 39.7% 39.8% 1.9% 38.0% 37.3% 1.3% 1.0% FY17 FY18 FY18 FY19 FY20 FY17 FY18 FY18 FY19 FY20 Return on Net Worth (RONW) (%) Asset Quality I-GAAP IND-AS I-GAAP
Slide 29: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in Million) Q4FY20 Q3FY20 Q-o-Q Q4FY19 Y-o-Y Revenue from operations (A) 26,369 25,806 2% 24,552 7% Less: Finance cost (B) 12,895 12,088 7% 11,443 13% NII (C= A+B) 13,474 13,718 -2% 13,109 3% Other Income (D) 389 354 10% 243 60% Total Income (E=C+D)
Slide 30: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in Million) FY 20 FY 19 Y-o-Y FY 18 Revenue from operations (A) 100,979 87,229 16% 66,334 Less: Finance cost (B) 48,288 39,445 22% 30,816 NII (C= A+B) 52,691 47,784 10% 35,518 Other Income (D) 1,473 869 69% 517 Total Income (E=C+D) 54,164 48,653 11%
Slide 31: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Mar 31, 2020 As on Mar 31, 2019 As on Mar 31, 2018 ASSETS Financial Asset a) Cash and cash equivalents 6,768 5,017 2,719 b) Bank balance other than (a) above 7,490 4,568 1,392 c) Derivative financial instruments 929 100 4 d) Trade Receivabl
Slide 32: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in Million) As on Mar 31, 2020 As on Mar 31, 2019 As on Mar 31, 2018 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 402 770 261 b) Payables i) Trade payables 6,063 9,795 10,554 ii) Other payables 294 342 - c) Debt S
Slide 33: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Particulars (Rs. in Million) FY20 FY19 Y-o-Y FY18 Revenue from operations (A) 118,830 103,717 15% 78,839 Less: Finance cost (B) 53,906 44,323 22% 34,362 NII (C= A+B) 64,924 59,394 9% 44,477 Other Income (D) 1,135 592 92% 283 Total Income (E=C+D) 66,059 59,986 10% 4
Slide 34: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in Million) As on Mar 31, 2020 As on Mar 31, 2019 As on Mar 31, 2018 ASSETS Financial Asset a) Cash and cash equivalents 7,826 5,372 3,387 b) Bank balance other than (a) above 7,490 4,568 1,392 c) Derivative financial instruments 929 100 4 d) Trade Receiva
Slide 35: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in Million) As on Mar 31, 2020 As on Mar 31, 2019 As on Mar 31, 2018 LIABILITIES AND EQUITY Financial Liabilities a) Derivative financial instruments 402 770 261 b) Payables i) Trade payables 6,932 11,143 11,314 ii) Other payables 296 342 68 c) De
Slide 36: Summary & Key Ratios
Summary & Key Ratios on standalone basis As per IND-AS Year ended Year ended Year ended Particulars March – 20 March – 19 March – 18 RONW (Avg. Net Worth) 8.1% 15.2% 13.3% Debt / Equity 5.23:1 4.84:1 4.17:1 Capital Adequacy$ 19.6% 20.3% 22.7% Tier I 15.4% 15.5% 17.0% Tier II 4.2% 4.8% 5.7% EPS (Basi
Slide 37: Spread Analysis
Spread Analysis on standalone basis As per IND-AS Year ended Year ended Year ended Particulars March – 20 March – 19 March – 18 Total Income / Average Assets 14.5% 14.7% 13.9% Interest / Average Assets 6.8% 6.6% 6.4% Gross Spread 7.7% 8.1% 7.5% Overheads / Average Assets 2.9% 3.1% 2.9% Write offs &
Slide 38: NPA Analysis (on Business Assets)
NPA Analysis (on Business Assets) on standalone basis Particulars (Rs. in Million) except figures in % Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Business Assets (including Provisions) 680,890 631,216 515,276 Gross NPA (Stage 3) 57,467 40,706 50,270 Less: ECL Provisions (Stage 3) 17,802 7,799 17,161 Net
Slide 39: NPA Analysis – Covid-19 Zone classification
NPA Analysis – Covid-19 Zone classification on standalone basis Stage-Wise Covid-19 zone mapping of Customer count, Business Assets and Provisions Green Zone Orange Zone Red Zone 100% 29% 30% 34% 80% 35% 35% 35% 60% 40% 41% 32% 32% 32% 37% 40% 20% 31% 29% 34% 33% 33% 28% 0% Count AUM Provision Count
Slide 40: 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 39
Slide 41: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Accounting Basis As per IND-AS Year ended Year ended Year ended Particulars (Rs. million) except figures in % March – 20 March – 19 March – 18 Loans disbursed 18,764 25,811 27,892 No. of Customer Contracts (nos.) 95,523 171,187 218,572 Outstanding loan book 78,
Slide 42: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Accounting Basis As per IND-AS Year ended Year ended Year ended Particulars (Rs. million) March – 20 March – 19 March – 18 No. of Policies for the Period (nos.) 2,233,711 2,265,146 2,058,613 Net Premium 20,791 19,238 17,490 Total income 3,369 3,234 2451 PBT 739 1,0
Slide 43: 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 42
Slide 44: Awards and Accolades
Awards and Accolades ■ Ranked 6th Best Large Workplaces in the Asia’s Best Workplaces 2020 and India’s 25 Best Workplaces in BFSI -2020 by The Great Place to Work Institute® ■ Global Corporate Sustainability Award in the award category: Reporting, Emerging Market at Taipei, Taiwan ■ Recognized as th
Slide 45: 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 44
Slide 46: 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 47: 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 48: Thank You
Thank You Transforming rural lives across the country 47
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