mahindra finance (analysing the historical financial statement)

Mahindra FINANCE

Transforming rural life across the country

Intr

oduc

tion

Is a subsidiary of Mahindra and Mahindra Limited

It provides loan based on customers future earning capacity.

Special Focus- Rural, semi-urban non-banking finance industry

has 657offices covering 25states and4 union territories in India

It finances for a wide range of vehicles, home development requirements

strived towards developing skill sets of the local population

Shareholding Pattern

Mahindra & Mahindra 51.20 %FII 38 %Mutual Funds & DII 5.80%Non Institutions 5%

Industry Overview

Automobile Finance Market to Grow by 19-21% over the next 2 years

(Rs. Billion) FY10 FY11 FY12 FY13 FY17 CAGR FY12-FY17

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- WHEELERS

60 77 93 108 199 15-17%

TOTAL 789 1,110 1,119 1,288 2,923 19-21%

Business Strategy

Business StrategyGrowth in rural & semi urban markets for vehicle & automobile Financing

Expand Branch Network

Leverage existing customers base through Direct Marketing Initiatives

Diversify Product Portfolio

Continue to attract, train & retain talented employees

Effective use of technology to improve productivity

Leverage the “Mahindra” Ecosystem

Business Model

Break up of estimated value of Assets Financed Segments Year ended March-

13Year ended March-12

Year ended March-11

Auto/Utility Vehicles 31% 26% 30%

Tractors 19% 20% 22%

Cars 24% 26% 28%

Commercial vehicles & construction equipments

14% 17% 11%

Pre-owned vehicles & others

12% 11% 9%

Mahindra FinanceAnalysis of Statement

Some view onStandalone P&L

Standalone P&L (Operating Revenue & Total Expenses)

2011 2012 2013 20140

100000

200000

300000

400000

500000

600000

196435.45

276770.07

385672.15

492163.21

122305.4

183304.7

270222.7

385210.3

Operating Revenue (in Lakhs) Total Expenses (in Lakhs)

Operating RevenueCAGR

35.8%

Total ExpensesCAGR

46.6%

Standalone P&L(Operating Revenue Source ) In ‘% of operating income’

2011 2012 2013 20140.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

100.00% 100.00% 100.00% 100.00%

85.61% 88.13% 89.09% 91.86%

14.39% 11.87% 10.91% 8.14%

Interest Income Total operating Income Other Financial Services

Standalone P&L (Total Expenses Ratio ‘on operating income’)

2011 2012 2013 20140.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

100.0% 100.0% 100.0% 100.0%

62.3% 66.2% 70.1%78.3%

33.6%40.5% 42.0% 44.5%

Operating Income (in %) Total Exp. On Sales(in %) Interest Cost on Sales (in %)

Standalone P&L (Provision for NPA)

2011 2012 2013 2014

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

43.75%

37.10%

30.77%

55.61%

-2.6% -1.3%

1.5%5.0%

NPA (As per BS) (in'% of LTP) NPA(As per P&L) (in '% of Operating Income)

Standalone P&L (PAT)

2011 2012 2013 20140.0%

5.0%

10.0%

15.0%

20.0%

25.0%23.6%

22.4% 22.9%

18.0%

PAT(in '%of Operating Income)

PAT(in '%of Operating Income)

Some view onConsolidated P&L

Consolidated P&L (Operating Revenue & Total Expenses)

2011 2012 2013 20140

100000

200000

300000

400000

500000

600000

202561.29

288937.88

409498.79

527522.73

129087.6

194902.3

279082.6

383902.5

Operating Revenue (in Lakhs) Total Expenses

Operating RevenueCAGR

37.6%

Total ExpensesCAGR

43.8%

Consolidated P&L(PAT ‘in % of operating income’ )

2011

2012

2013

2014

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

23.6%

22.4%

22.9%

18.0%

24.4%

22.3%

22.7%

18.3%

PAT(Consolidated) (in %) PAT (Standalone)(in %)

DU-PONTANALYSIS

2011 20142012 2013

DuPont

Profit Margin

Total Asset Turnover

Equity Multiplier

ROA

ROE

24.37%

4.34% 4.80%

4.82 4.47 4.89 4.04

18.10% 20.18% 21.21% 19.36%

19.92% 19.68%

22.31%

3.75% 4.52%

19.46%

18.29% 22.68%

20.52%

DuPont

2010 2011 2013 20140.00%

5.00%

10.00%

15.00%

20.00%

25.00%

4.04% 4.89% 4.47% 4.82%

4.80% 4.34% 4.52% 3.75%

19.36%21.21%

20.18%

18.10%

Equity Multiplier ROA ROE

CASH FLOW

2011 20142012 2013

CASH-FLOW

FCFF

FCFE

ROE

Reinvestment Ratio

Sustainable GR

0.87

4.93% 6.43% 6.90%

4.07% 5.59% 5.99%

102514.15

-395951.08

0.83 0.87

60881.96

-389190.36 -465318.71

116723.41

Beta 0.600.60

Average Beta (from Jan,2005 to Feb,2015)

2011 20142012 2013

PE & Price/Book Value

Market Price

EPS

Book Value

PE Ratio

MP/Book Value

139.27

2.24 2.89

472.93 408.80 295.93 248.86

0.51 0.51 0.48 0.56

82.49 48.18

140.74

2.84 2.51

62.77

242.75 207.34

85.60

Comparison with LIC HOUSING FIN..

2011 2012 2013 20140.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Mahindra Finance LIC

PAT(% Of Revenue)

ROA,ROE&ROLE OF EQUITY MULTIPLIER

Equity MultiplierROA ROE

4.34%

4.80%

4.82

4.47

4.89

4.04

18.10%

20.18%

21.21%

19.36%

3.75%

4.52%

1.56%

1.73%

1.53%

1.53%

10.00

9.69

9.15

9.96

15.33%

14.80%

14.25%

17.25%

MF LIC MF LIC MF LIC

2011

2014

2012

2013

Beta0.600.60

Average Beta (from Jan,2005 to Feb,2015)

0.601.38

MF LIC

Thank You

33

MMS-B, 2014-15Sumit & Group