Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q1 FY17 Earnings Presentation
45 slides from Mahindra & Mahindra Financial Services's earnings presentation, June 2016
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update
Mahindra & Mahindra Financial Services Limited Quarter Result Update June - 2016 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 2
Slide 2: 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 2
Slide 3: Company Background
Company Background Parentage: Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 891 billion)*, India‟s largest tractor and utility vehicle manufacturer About MMFSL: MMFSL (Mcap: Rs 180 billion)*, one of India‟s leading non-banking fin
Slide 4: MMFSL Group structure
MMFSL Group structure (1) 85% Mahindra Insurance Brokers Limited (“MIBL”) Mahindra & Mahindra Limited 87.5%(2) Mahindra Rural Housing Finance Limited 51.20% (“MRHFL”) 49% Mahindra Finance USA LLC (Joint venture with Rabobank group subsidiary) Mahindra & Mahindra Financial Services Limited 100% Mahin
Slide 5: Our Journey
Our Journey Commenced housing finance Long term debt rating business through MRHFL Maiden QIP Issue of Rs.4.26 bn. upgraded to AAA by India Ratings and Raised Rs. 4.14 bn. through JV with Rabobank subsidiary Maiden Retail NCD issue Brickwork. Private Equity for tractor financing in USA of Rs. 1000 c
Slide 6: Shareholding Pattern (as on 30th June 2016)
Shareholding Pattern (as on 30th June 2016) Shareholding Pattern Chart Top 10 Public Shareholders Amansa Holdings Private Limited 4.8% 9.7% Aranda Investments (Mauritius) Pte Ltd Franklin Templeton Investment Funds Life Insurance Corporation Of India 51.9% Government Of Singapore 33.6% B
Slide 7: Industry Overview
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 7 7
Slide 8: Auto Industry: Long term growth potential
Auto Industry: Long term growth potential Global Comparison in terms of PV per thousand people (1) Addressable HHs to increase over the next 5 years 300 285 588 267 526 238 500 250 476 385 200 294 150 270 115 196 100 147 71 93 50 31 37 39 23 17 12 0 2009-10 E 2015-16 E 2014-15 E 2019-20 P China Mexi
Slide 9: Passenger Vehicles Industry: Overall Demand Drivers
Passenger Vehicles Industry: Overall Demand Drivers FY 06 – FY11 FY 11 – FY 16 FY 16 – FY 20 Small Cars 14% 2% 11% - 13% Small Cars to drive growth in the long term due to higher aspiration levels led by economy Sedans 10% -9% 8% - 10% recovery and lower cost of ownership UV + Vans 12% 5% 12% - 14
Slide 10: Commercial Vehicles Industry: Overall Demand Drivers
Commercial Vehicles Industry: Overall Demand Drivers FY 11 – FY 16 FY 16 – FY 20 MHCV goods vehicle sales supported by growth in economic activity, LCV (goods) 6% 11% - 14% export-import and freight traffic, construction activities etc. MHCV (goods) 0% 10% - 12% Demand for LCVs fuelled by increa
Slide 11: Tractors Industry: Overall Demand Drivers
Tractors Industry: Overall Demand Drivers Industry - Tractors FY 2015 FY 2016 FY 2017 (E) FY 16 – FY 20 (P) Volume Growth Volume Growth Growth Growth Tractors 551,463 -13% 493,764 -11% 10% - 12% 8% - 10% Accumulated Rainfall Period: 01-06-2016 - 19-07-2016 MET Regions (Sub-divisions) Actual (mm) Nor
Slide 12: Auto Industry Volume
Auto Industry Volume Domestic Sales 1QFY17 1QFY16 Y-o-Y FY16 FY15 Y-o-Y (Volume in „000) (Nos.) (Nos.) Growth (%) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 476 482 (1.4%) 2,025 1,877 7.9% UVs 221 171 29.5% 764 723 5.7% Commercial Vehicles (CVs) M&HCVs 71 62 14.5% 302 23
Slide 13: Automobile Finance Market: 5 years Projected Growth
Automobile Finance Market: 5 years Projected Growth @16-18% Growth in New Vehicle Finance Disbursements 5 year CAGR (% growth YoY) FY12E FY13E FY14E FY15E FY16E FY17E (FY21P) Cars 8% -7% -6% 3% 15% 15% - 17% 17% - 19% Utility Vehicles 16% 39% -6% 1% 16% 16% - 18% 20% - 22% Commercial Vehicles 17% -1
Slide 14: Housing Finance Growth
Housing Finance Growth 10000 Growth in Housing Finance Disbursements (Rs.bn) 9000 8,303 8000 7000 Growth in disbursements to be supported by rising focus of 6000 developers on the affordable housing segment 5000 4000 3,302 3000 1,752 2000 990 Tier II and III cities to drive growth 1000 552 0 200
Slide 15: Business Strategy
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 15 15
Slide 16: 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 17: Extensive Branch Network
Extensive Branch Network Extensive branch network with presence in 26 states and 3 union territories in India through 1172 offices Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 11 HP 35 27 1167 1172 PB UC 19 1108 30 HR Delhi Sikkim 17 UP 3
Slide 18: 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 19: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Quarter ended Quarter ended Year ended Asset Class June – 16 June – 15 March – 16 Auto/ Utility vehicles 29% 31% 30% Tractors 17% 16% 15% Cars 22% 24% 22% Commercial vehicles and Construction equipments 13% 10% 11% Pre-owned vehicles 14% 16% 16% Others*
Slide 20: Break up of AUM
Break up of AUM As on As on As on Asset Class June – 16 June – 15 March – 16 Auto/ Utility vehicles 31% 31% 31% Tractors 17% 18% 17% Cars 24% 23% 24% Commercial vehicles and Construction equipments 13% 13% 12% Pre-owned vehicles 9% 10% 10% Others* 6% 5% 6% 1. Approximate percentages 2. As on 30th Ju
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 Long term and Subordinated debt AAA (ind) Stable Short term debt IND A1+ -- CARE Ratings Outlook Long term and Subordinated debt AAA -- Br
Slide 22: Broad Based Liability Mix
Broad Based Liability Mix Total consortium size of Rs.15,300 mn. comprising several banks Funding Mix by Investor profile (June’ 16) Funding Mix by type of Instrument (June’ 16) Investor Type Amount (INR mn.) % Share Instrument Type Amount (INR mn.) % Share NCDs 113,156 36% Mutual Fund 57,884 19% Re
Slide 23: 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 24: Financial Information
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 24 24
Slide 25: Key Financials
Key Financials Figures on standalone basis Total Income Profit after Tax Value of Asset Financed Q1 FY 17 Rs 13,757 mn Rs 870 mn Rs 65,639 mn 1% 2% 8% Q1 FY 16 Rs 13,684 mn Rs 890 mn Rs 60,569 mn * Note: The Company is required to recognise NPA based on four months overdue by end of FY 2017, which t
Slide 26: Growth Trajectory
Growth Trajectory Figures on standalone basis Loan Book (Rs. Bn) Revenues (Rs. Bn) 11% 378.14 9% 366.58 329.30 341.19 296.17 55.85 59.05 49.53 13.68 13.76 FY14 FY15 FY16 Q1FY16 Q1FY17 FY14 FY15 FY16 Q1FY16 Q1FY17 Profit after Tax (1) (Rs. Bn) Book Value Per Share (2) (Rs.) 9% 8.87 107.0 108.2 8.32 1
Slide 27: Financial Performance
Financial Performance Figures on standalone basis Cost to income ratio (1) (%) Return on Assets (ROA) (2) (%) 47.6% 3.2% 2.5% 1.8% 36.1% 36.4% 1.0% 0.9% 33.0% 32.6% FY14 FY15 FY16 Q1FY16 Q1FY17 FY14 FY15 FY16 Q1FY16 Q1FY17 Return on Net Worth (RONW) (*) (%) Asset Quality Gross NPA Net NPA 10.7% 18.6
Slide 28: Standalone Profit & Loss Account
Standalone Profit & Loss Account Particulars (Rs. in Million) Q1FY17 Q4FY16 Q-o-Q Q1FY16 Y-o-Y FY16 Revenue from operations 13,603 15,995 (15.0%) 13,163 3.3% 56,468 Securitisation Income (net) 61 726 (91.6%) 445 (86.3%) 2,064 Less: Finance cost 6,910 6,711 3.0% 6,445 7.2% 26,393 NII 6,754 10,010 (32
Slide 29: Standalone Balance Sheet
Standalone Balance Sheet Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,129 1,128 1,129 b) Reserves and Surplus 60,417 56,498 59,752 Shareholders' funds 61,546 57,626 60,881 Non-current liabilities a
Slide 30: Standalone Balance Sheet (Contd.)
Standalone Balance Sheet (Contd.) Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016 ASSETS Non-current assets a) Fixed Assets 1,161 1,106 1,135 b) Non-current investments 9,916 7,914 9,923 c) Deferred tax assets (Net) 6,133 4,280 5,853 d) Long-term loans and advan
Slide 31: Consolidated Profit & Loss Account
Consolidated Profit & Loss Account Quarter ended Quarter ended Year ended Particulars (Rs. in Million) June – 16 June 15 March - 16 Revenue from operations 15,679 15,046 65,539 Other income 107 80 436 Total Revenue 15,786 15,126 65,975 Expenses: Employee benefits expense 2,104 1,593 7,041 Finance co
Slide 32: Consolidated Balance Sheet
Consolidated Balance Sheet Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,129 1,128 1,129 b) Reserves and Surplus 64,481 59,444 63,565 Shareholders' funds 65,610 60,572 64,694 Minority Interest 700 5
Slide 33: Consolidated Balance Sheet (Contd.)
Consolidated Balance Sheet (Contd.) Particulars (Rs. in Million) As on Jun 30, 2016 As on Jun 30, 2015 As on Mar 31, 2016 ASSETS Non-current assets a) Fixed Assets 1,332 1,199 1,291 b) Non-current investments 6,399 5,807 6,522 c) Deferred tax assets (Net) 6,282 4,349 5,992 d) Long-term loans and adv
Slide 34: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Quarter ended Quarter ended Year ended Particulars June – 16 June – 15 March – 16 RONW (Avg. Net Worth) 5.7% 6.2% 11.4% Debt / Equity 4.87:1 4.68:1 4.84:1 Capital Adequacy 19.5% 18.1% 17.3% Tier I 14.3% 15.3% 14.6% Tier II 5.2% 2.7% 2.7% EPS (Basic) (
Slide 35: Spread Analysis
Spread Analysis Figures on standalone basis Quarter ended Quarter ended Year ended June – 16 June – 15 March – 16 Total Income / Average Assets 14.3% 15.8% 16.3% Interest / Average Assets 7.2% 7.4% 7.3% Gross Spread 7.1% 8.4% 9.0% Overheads / Average Assets 3.4% 3.1% 3.2% Write offs & NPA provisions
Slide 36: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) June – 16 June – 15 March – 16 Gross Non - Performing Assets 44,147* 29,411 32,242* Less: NPA Provisions 23,087 16,644 19,891 Net Non – Performing Assets 21,060 12,767 12,351 Total Assets (Incl. NPA Provision) 411,337 366,656 400,764
Slide 37: Key Subsidiaries
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 37 37
Slide 38: Mahindra Rural Housing Finance Limited
Mahindra Rural Housing Finance Limited Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 16 June – 15 March – 16 Loans disbursed 4,050 3,392 15,525 No. of Customer Contracts (Nos) 28,654 25,048 125,074 Outstanding loan book 35,576 23,646 32,645 Total income 1,437 996 4,954 PBT
Slide 39: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Quarter ended Quarter ended Year ended Particulars (Rs. million) June – 16 June – 15 March – 16 Total income 365 317 1,492 Net premium 2,680 2,499 10,870 PBT 154 146 752 PAT 101 96 485 No. of Policies for the Period (nos.) 360,128 300,483 1,330,929 No. of employees
Slide 40: Awards & Accolades
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 40 40
Slide 41: Awards and Accolades
Awards and Accolades Great Place to Work Institute in association with Economic Times has recognized Mahindra & Mahindra Financial Services Ltd. as one of INDIA‟S BEST COMPANIES TO WORK FOR, 2016. The FSS sector has also topped the sectors for the below 2 categories: Ranked 1st at Best Place to W
Slide 42: Risk Management Policies
Company Overview Industry Overview Business Strategy Financial Information Key Subsidiaries Awards & Accolades Risk Management Policies Transforming rural lives across the country 42 42
Slide 43: Conservative Risk Management Policies
Conservative Risk Management Policies Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL 5 and <= 16 10% > 4* and <= 11 10% > 16 and <= 28 20% > 11 and <= 24 50% > 28 and <= 52 30% > 24 months 100% > 52 months 50% Note: During the current quarter, the Company has reviewed the bas
Slide 44: 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 45: Thank You
Thank You Transforming rural lives across the country 45 45
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