Mahindra & Mahindra Financial Services Ltd. · NSE:M&MFIN
Mahindra & Mahindra Financial Services — Q2 FY14 Earnings Presentation
39 slides from Mahindra & Mahindra Financial Services's earnings presentation, September 2013
Slide 1: Mahindra & Mahindra Financial Services Limited Quarter Result Update
Mahindra & Mahindra Financial Services Limited Quarter Result Update SEPTEMBER - 2013 1
Slide 2: Company overview
Company overview Transforming rural lives across the country 2
Slide 3: Background
Background • Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited (Mcap: Rs 541 billion)*, one of India’s leading tractor and utility vehicle manufacturers • MMFSL (Mcap: Rs 155 billion)* is one of India’s leading non-banking finance companies foc
Slide 4: MMFSL Group structure
MMFSL Group structure Mahindra & Mahindra Limited 51.20% Mahindra & Mahindra Financial Services Limited (1) 85% 87.5%(2) 49% 100% USA Mahindra Insurance Mahindra Rural Housing Mahindra Finance USA Mahindra Business & Brokers Limited Finance Limited LLC Consulting Services (“MIBL”) (“MRHFL”) (Joint v
Slide 5: Our Journey Thus Far
Our Journey Thus Far Stake sale in MIBL to Inclusion resources pvt. Ltd. QIP Issue of Rs. 8.67 Bn FY 13 Maiden QIP Issue of Rs.4.26 Bn JV with Rabobank subsidiary for tractor financing in USA FY 11 Received 12.5% equity participation Commenced housing finance business FY 09 from NHB for MRHFL throug
Slide 6: Shareholding pattern
Shareholding pattern (as on September 30, 2013) Key Shareholders Cartica Capital Ltd Non Wasatch Emerging Markets Small Cap Fund ESOP Institutions Mutual 4.9% Trust TIAA-CREF Institutional mutual funds Funds & 1.0% DII JP Morgan SICAV Investment Company 3.2% Mahindra Morgan Stanley Asia (S
Slide 7: Industry overview
Industry overview Transforming rural lives across the country 7
Slide 8: Automobile Finance Market to Grow by 19-21% over the next 5 years
Automobile Finance Market to Grow by 19-21% over the next 5 years Growth in New Vehicle Finance Disbursements CAGR FY12- (Rs. billion) FY10E FY11E FY12P FY13P FY17P FY17P Cars 349 476 456 506 1165 19-21% Utility Vehicles 108 155 172 217 409 18-20% Commercial Vehicles 272 402 478 457 1150 18-20% Two-
Slide 9: Domestic Car and UV Industry to grow at a CAGR of 12-14%
Domestic Car and UV Industry to grow at a CAGR of 12-14% over the next 5 years FY12 FY13E FY14P FY13-18P Strong prospects in the long-term. CAGR (%) CAGR (%) CAGR (%) CAGR (%) Growth to be driven by increase in income of households and higher Small Cars (1.5) (9)-(7) 8-10 11-13 passenger vehicle p
Slide 10: Auto Industry Volume
Auto Industry Volume Domestic Sales H1FY14 H1FY13 Y-o-Y (Volume in „000) (Nos.) (Nos.) Growth (%) Passenger Vehicles (PVs) Passenger Cars / Vans 854 897 (5%) UVs 345 369 (7%) Commercial Vehicles (CVs) M&HCVs 105 141 (25%) LCVs 221 245 (10%) Three Wheelers 240 251 (4%) Source: Crisil 10
Slide 11: Overall Demand Drivers
Overall Demand Drivers Increase in affordability Growth in Addressable Market Entry of New Players and New Model Launches Increase in dealerships and access to Finance Reduction in holding period, which increases the demand for second vehicles Growth in Economic Activity Infrastructure
Slide 12: Business Strategy
Business Strategy Transforming rural lives across the country 12
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 MMFSL has an extensive branch network with presence in 25 states and 4 union territories in India through 687 offices as of September 30, 2013 – Branches have authority to approve loans within prescribed guidelines Coverage Branch Network as of JK 5 HP 15 24 PB UC 22 10 68
Slide 15: Diversified Product Portfolio
Diversified Product Portfolio Loans for auto and utility vehicles, tractors, cars, commercial Vehicle Financing vehicles and construction equipments Pre-Owned Loans for pre-owned cars, multi-utility vehicles, tractors and Vehicles commercial vehicles Loans for varied purposes like project fina
Slide 16: Break up of estimated value of Assets Financed
Break up of estimated value of Assets Financed Half year ended Half year ended Year ended Segments September – 13 September – 12 March–13 Auto/ Utility vehicles 30% 29% 31% Tractors 20% 18% 19% Cars 23% 26% 24% Commercial vehicles and 13% 15% 14% Construction equipments Pre-owned vehicles and others
Slide 17: Break up of AUM
Break up of AUM As on As on As on Segments September – 13 September – 12 March – 13 Auto/ Utility vehicles (M&M) 28% 29% 29% Tractors (M&M) 19% 19% 19% Cars and Non M&M UVs, Tractors & 33% 32% 32% SCVs Commercial vehicles and 12% 13% 13% Construction equipments Pre-owned vehicles and others 8% 7% 7%
Slide 18: Broad based Liability Mix
Broad based Liability Mix MMFSL believes that its credit rating and strong brand equity enable it to borrow funds at competitive rates Total consortium size of Rs.10 Bn comprising several banks Credit Rating CRISIL Outlook Fixed Deposit programme FAAA Stable Short term debt A1+ Stable Long term
Slide 19: Employee Management and Technology Initiatives
Employee Management and Technology Initiatives Employee engagement & training Technology initiatives Training programs for employees on regular Approximately 98% of our 687 offices are basis connected to the centralised data centre in Mumbai 5 days induction program on product knowledge, busin
Slide 20: Financial Information
Financial Information Transforming rural lives across the country 20
Slide 21: Key Financials
Key Financials Q2FY14 Vs Q2FY13 (Figures on standalone basis) Growth in Value of Asset Growth in Total income Growth in PAT Financed Rs 12,127 mn Rs 2,212 mn Rs 58,036 mn 31% 18% 5% Rs 9,292 mn Rs 1,876 mn Rs 55,496 mn H1FY14 Vs H1FY13 (Figures on standalone basis) Growth in Value of Asset Growth in
Slide 22: Strong Growth Trajectory
Strong Growth Trajectory Figures on standalone basis Increasing Loan Book (Rs. Bn) Growing Revenues (Rs. Bn) 280.86 38.95 240.38 40% 39% 27.95 174.98 23.11 19.78 124.02 FY11 FY12 FY13 H1FY14 FY11 FY12 FY13 H1FY14 Improving Profitability (1) (Rs. Bn) Increasing Book Value Per Share (2) (Rs.) 8.83 85.
Slide 23: Consistent Financial Performance
Consistent Financial Performance Figures on standalone basis Declining cost to income ratio (1) (%) Steady ROA (2) (%) 4.1% 4.0% 36.3% 3.9% 35.4% 3.4% 3.0% 33.3% 32.9% 32.6% FY11 FY12 FY13 H1FY13 H1FY14 FY11 FY12 FY13 H1FY13 H1FY14 Increasing RONW (3) (%) Robust Asset Quality 22.8% 23.5% 4.0% Gross
Slide 24: Standalone Profit & Loss Statement
Standalone Profit & Loss Statement Half year ended Half year ended Year ended Particulars (Rs. in Million) September – 13 September – 12 March - 13 Revenue from operations 22,956 17,504 38,567 Other income 156 174 380 Total Revenue 23,112 17,678 38,947 Expenses: Employee benefits expense 1,294 1,173
Slide 25: Standalone Balance Sheet
Standalone Balance Sheet As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,127 1,028 1,126 b) Reserves and Surplus 47,559 31,998 43,420 Shareholders' funds 48,686 33,026 44,546 Non-current liabilities a) L
Slide 26: Standalone Balance Sheet (Cont’d)
Standalone Balance Sheet (Cont’d) As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 ASSETS Non-current assets a) Fixed Assets 1,126 1,020 1,068 b) Non-current investments 4,552 2,700 3,451 c) Deferred tax assets (Net) 2,446 2,046 2,382 d) Long-term loans and advances
Slide 27: Key Subsidiaries
Key Subsidiaries Transforming rural lives across the country 27
Slide 28: Mahindra Rural Housing Finance
Mahindra Rural Housing Finance Half year ended Half year ended Year ended Particulars (Rs. million) September – 13 September – 12 March – 13 Loans disbursed 2,509 1,769 4,329 No. of Customer Contracts (Nos) 20,673 23,258 61,332 Outstanding loan book 10,712 6,765 8,795 Total income 920 596 1,404 PBT
Slide 29: Mahindra Insurance Brokers Limited
Mahindra Insurance Brokers Limited Half year ended Half year ended Year ended Particulars (Rs. million) September – 13 September – 12 March – 13 Total income 490 377 863 Net premium 3,199 2,388 5,538 PBT 254 207 512 PAT 168 140 344 No. of Policies for the Period (nos.) 462,421 356,514 802,829 No. of
Slide 30: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Half year ended Half year ended Year ended Particulars (Rs. in Million) September – 13 September – 12 Mar - 13 Revenue from operations 24,505 18,522 40,950 Other income 108 90 179 Total Revenue 24,613 18,612 41,129 Expenses: Employee benefits expense 2,337 1,888
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 EQUITY AND LIABILITIES Shareholders' funds a) Share Capital 1,127 1,028 1,126 b) Reserves and Surplus 49,160 32,960 44,670 Shareholders' funds 50,287 33,988 45,796 Minority Interest 304 85 2
Slide 32: Consolidated Balance Sheet (Cont’d)
Consolidated Balance Sheet (Cont’d) As on Sep 30 As on Sep 30 As on Mar 31 Particulars (Rs. in Million) 2013 2012 2013 ASSETS Non-current assets a) Fixed Assets 1,206 1,070 1,137 b) Non-current investments 3,135 1,829 2,417 c) Deferred tax assets (Net) 2,500 2,078 2,421 d) Long-term loans and advanc
Slide 33: Summary & Key Ratios
Summary & Key Ratios Figures on standalone basis Half year ended Half year ended Year ended Particulars September – 13 September – 12 March – 13 RONW (Avg. Net Worth) 17.4% 22.0% 23.5% Debt / Equity 4.63:1 5.23:1 4.24:1 Capital Adequacy 19.1% 16.5% 19.7% Tier I 16.1% 14.0% 17.0% Tier II 3.0% 2.5% 2.
Slide 34: Spread Analysis
Spread Analysis Figures on standalone basis Half year ended Half year ended Year ended September – 13 September – 12 March – 13 Total Income / Average Assets 17.1% 17.6% 18.0% Interest / Average Assets 7.4% 7.4% 7.4% Gross Spread 9.7% 10.2% 10.6% Overheads / Average Assets 3.2% 3.4% 3.5% Write offs
Slide 35: NPA Analysis
NPA Analysis Figures on standalone basis Particulars (Rs. million) September – 13 September – 12 March – 13 Gross Non - Performing Assets 12,223 8,734 7,630 Less: NPA Provisions 6,682 5,464 5,030 Net Non – Performing Assets 5,541 3,270 2,600 Total Assets (Incl. NPA Provision) 294,986 223,423 256,067
Slide 36: Key Risk Management Practices
Key Risk Management Practices Transforming rural lives across the country 36
Slide 37: Conservative Risk Management Policies
Conservative Risk Management Policies Provisioning Norms Duration (months) RBI Norms Duration (months) MMFSL 6 and <= 18 10% > 5 and <= 11 10% > 18 and <= 30 20% > 11 and <= 24 50% > 30 and <= 54 30% > 24 months 100% > 54 months 50% Key Risks & Management Strategies Key Risks Management Strategies
Slide 38: 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 39: Thank You
Thank You Transforming rural lives across the country 39
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