ujjivan financial services ltd. - india...
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Issue details
Face value (Rs) 10
Fresh issue (up to)
Rs358cr
Offer for Sale (up to)
2.49cr Equity Shares
Issue type 100% Book building
Industry Financials
Share reservation (%)
QIB 50
Non institutional 15
Retail 35
Company management K. R. Ramamoorthy
Non‐executive Chairman and Independent Director
Mr. Samit Ghosh
Managing Director and CEO
Issue manager
BRLM
Kotak Mahindra Capital Co. Ltd., Axis Capital Ltd., ICICI Securities Ltd., IIFL Holdings Ltd.
Registrar Karvy Computershare Private Limited
Listing BSE, NSE
Ujjivan Financial Services Ltd.
Issue Opens: 28‐Apr‐16 Issue Closes: 02‐May‐16 Price Band: Rs207‐210
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
For further details, write to us at: [email protected]
IPO Note
April 22, 2016
Note: India Infoline Limited is a syndicate member in the issue; accordingly, this note is prepared based on the Red Herring Prospectus and is for informative purpose only.
This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Draft Red Herring Prospectus/ Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investments in securities are subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.
Business Overview Ujjivan is one of the leading MFIs in the country with a deep pan‐India presence. As of December 31, 2015, the Gross AUM of Ujjivan was Rs 4,589cr spread across 24 states and union territories and 209 districts. The
company served over 2.77 million active customers through 470 branches and 7,862 employees. The business is primarily based on the joint liability group lending model to economically active women. The company also offers individual loans and the share of it has been increasing with the management focused on converting group lending customers to individual lending customers. Ujjivan is amongst the 10 companies in India to receive in‐principle approval from the RBI to set up a small finance bank (SFB) on October 7, 2015.
Underpenetration of micro credit to drive robust growth for MFIs As per CRISIL Research (Microfinance, November 2015), AUMs of non‐Andhra Pradesh MFIs is expected to rise at 30‐34% CAGR, while total AUMs of all MFIs (including those in AP) will rise at 29‐31% over FY15‐18. The growth in loan portfolio will be driven by non‐AP states, where micro‐credit penetration is low. Commercial Banks are finding it more comfortable to lend indirectly to borrowers through MFIs who are specialized institutions.
Transitioning into a SFB Ujjivan is well positioned for the transition from microfinance operations to banking operations given its resources, operational strength and capabilities. In order to satisfy the criteria for corporate structure, ownership and control prescribed under the SFB Guidelines, Ujjivan would float a wholly owned subsidiary and transfer the existing business to the subsidiary, which will, in turn, be the proposed SFB.
Key strengths of Ujjivan 1) Leading MFI with a deep pan‐India presence; 2) Strong track record of financial performance; 3) Experienced leadership and strong corporate governance; 4) Robust technology driven operating model 5) Robust risk management framework 6) Focus on employee welfare.
Financial Highlights Y/e 31 Mar FY13 FY14 FY15 9M FY16
NII (Rs cr) 125 186 281 358
PAT (Rs cr) 33 58 76 122
RoA* (%) 2.9 3.4 2.5 3.7
RoE* (%) 11.8 16.9 13.7 20.4 * On an annualized basis for 9M FY16 Source: RHP, India Infoline Research
Page 2 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
About the Company
Ujjivan Financial Services Ltd., (Ujjivan) started operations as an NBFC in 2005 with a mission to provide full range of financial services to the economically active poor who are not adequately served by financial institutions. The business is primarily based on the joint liability group lending model for providing collateral free, small ticket‐size loans to economically active women. The company also offers individual loans to Micro & Small Enterprises (MSE). Depending upon the end use, the products can be further sub‐divided into agricultural, education, home improvement, home purchase, livestock loans, etc. The entire assets under management (AUM) falls under the category of priority sector lending as prescribed by the RBI. Ujjivan follows an integrated approach to lending, which combines a high customer touch‐point typical of microfinance, with the technology infrastructure and back‐end support functions similar to that of a retail bank. This has enabled the company to manage increasing business volumes and optimize overall efficiencies.
Product Portfolio
Source: RHP, India Infoline Research
Group Loan Products Type of loan Ticket size range (Rs.) Tenure (months) Interest Rate (%)
Business Loan
6,000 ‐ 15,000 12 22
15,000 ‐ 30,000 12 or 24 22
>30,000 24 22
Family Loan 6,000 ‐ 35,000 12 or 24 22
Agriculture Loan 6,000 ‐ 50,000 12 or 24 22
Emergency Loan 2,000 ‐ 5,000 6 22
Education Loan 5,000 ‐ 15,000 12 22
Top up Loan 3,000 ‐ 6,000 9 22
Vishwas Loan 5,000 ‐ 15,000 12 22 Source: RHP, India Infoline Research
• Business loan • Family loan • Top up loan • Emergency loan • Education loan
• Livestock loan • Higher Education loan • Agriculture loan
• Home improvement loan • Home loan ‐ Self Construction • Home loan ‐ Under Construction Purchase • Home loan ‐ Ready purchase
• Business loan • Bazaar loan • Secured business loan
Group
Individual
Housing
MSE
Page 3 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Individual lending products Type of loan Ticket size range (Rs.) Tenure (months) Interest Rate (%) Agriculture Loan 31,000 ‐ 80,000 4 ‐ 12 24 Higher Education Loan 41,000 ‐ 3,00,000 6 ‐ 60 24 Home improvement Loan (unsecured) 51,000 ‐ 1,50,000 12 ‐ 36 24 Home improvement Loan (secured) 2,00,000 ‐ 5,00,000 24 ‐ 84 17.75 Secured Home Loan 2,00,000 ‐ 10,00,000 24 ‐ 120 15.75 Individual business Loan 41,000 ‐ 1,50,000 6 ‐ 24 24 Individual Bazaar Loan 21,000 ‐ 1,50,000 6 ‐ 24 24 Livestock Loan 41,000 ‐ 1,00,000 9 ‐ 24 24 Open Market Livestock Loan 41,000 ‐ 65,000 6 ‐ 24 24 Pragati Loan 51,000 ‐ 1,50,000 24 ‐ 36 23 Secured Business Loan 2,00,000 ‐ 10,00,000 24 ‐ 84 20
Source: RHP, India Infoline Research
Operation management is decentralized with four regional offices at Bengaluru, New Delhi, Kolkata and Pune. The two‐tiered management hierarchy consists of a national leadership team providing overall direction to the business and four regional leadership teams responsible for taking on‐ground operational decisions.
The company served over 2.77 million active customers through 470 branches and 7,862 employees. Further, as of September 30, 2015, it had ~11.15% market share of the NBFC‐MFI business in the country making Ujjivan, the third largest player in the country. Being a customer centric organization, the customer retention ratio stood high at 88% as of December 31, 2015. The company has a dedicated service quality department addressing customer grievances and their feedback.
In addition to loan products, the company also provides non‐credit offerings comprising of life insurance products, in partnership with insurance providers such as Bajaj Allianz Life Insurance Company Limited, Kotak Mahindra Old Mutual Life Insurance Limited and HDFC Standard Life Insurance Company Limited.
Operating Structure
Source: RHP, India Infoline Research
Page 4 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Strong traction in disbursements driving robust AUM growth
0
1,000
2,000
3,000
4,000
5,000
6,000
FY11 FY12 FY13 FY14 FY15 9M FY16
(Rs cr)
Gross AUM Disbursements
Source: RHP, India Infoline Research
Post FY13, operations have scaled‐up Steep increase in borrowers and AUM/branch
0
1500
3000
4500
6000
7500
9000
0
100
200
300
400
500
600
FY11 FY12 FY13 FY14 FY15 9M FY16
(no)(no)Branches Employees (RHS)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
(0.0)
0.6
1.2
1.8
2.4
3.0
3.6
FY11 FY12 FY13 FY14 FY15 9M FY16
(Rs cr)(mn)No of borrowers AUM/branch (RHS)
Source: RHP, India Infoline Research
Product Mix for 9M FY16 State‐wise AUM distribution (as of Dec 31, 2015)
87.6
12.4
Group lending (%)
Individual lending (%)
Total AUM: Rs4,589cr
19.3
2.8
3.3
3.7
4.8
5.0
5.3
12.4
13.1
15.1
15.3
0.0 5.0 10.0 15.0 20.0 25.0
Others
Assam
Jharkhand
Rajasthan
Gujarat
Haryana
Uttar Pradesh
Tamil Nadu
Maharashtra
West Bengal
Karnataka (%)
Source: RHP, India Infoline Research
Page 5 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Loan turnaround time has reduced significantly Brisk growth in NII
7.9
4.5
17.3
8.1
0.0
4.0
8.0
12.0
16.0
20.0
FY13 9M FY16
(days)Group loan Individual loan
8.0
10.0
12.0
14.0
16.0
18.0
0
70
140
210
280
350
420
FY11 FY12 FY13 FY14 FY15 9M FY16
(%)(Rs cr) NII NIM (RHS)
Source: RHP, India Infoline Research
Cost productivity (Opex/Avg. AUM) has improved Asset quality has been sound
17.5
13.8
10.8
8.8 8.5 7.6
‐
4.0
8.0
12.0
16.0
20.0
FY11 FY12 FY13 FY14 FY15 9M FY16
(%)
0.0
0.2
0.4
0.6
0.8
1.0
FY11 FY12 FY13 FY14 FY15 9M FY16
(%)
GNPA (%) NNPA (%)
Source: RHP, India Infoline Research
PAT has risen at rapid pace … driving recovery in RoA and RoE
12
0
33
58
76
122
0
30
60
90
120
150
FY11 FY12 FY13 FY14 FY15 9M FY16
(Rs cr)
0.0
3.0
6.0
9.0
12.0
15.0
18.0
21.0
0.0
0.6
1.2
1.8
2.4
3.0
3.6
4.2
FY11 FY12 FY13 FY14 FY15 9M FY16
(%)(%) RoA RoE (RHS)
Source: RHP, India Infoline Research
Page 6 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
North East West South Not Present
As of Dec 31, 2015, Gross AUM of Rs. 4,589cr was well distributed across north, south, east and west regions
As of Dec 31, 2015, Ujjivan had 470 branches across 24 states and union territories
Served over 2.77mn active customers as of Dec 31, 2015
Key Strengths of Ujjivan Leading MFI with a deep pan‐India presence Ujjivan is the third largest NBFC‐MFI in India in terms of loans disbursed as of September 30, 2015, with Gross AUM aggregating over Rs. 4,088cr (Source: MFIN Micrometer Report, September 2015). As of December 31, 2015, Gross AUM stood at Rs. 4,589cr which is well distributed across the north, south, east and west regions as Rs. 9,87cr, Rs. 1,424cr, Rs. 1,344cr and Rs. 834cr respectively. In addition to geographical diversification, company’s AUM is also well diversified in terms of type of location. While the initial focus was on the urban and semi‐urban poor, Ujjivan has gradually catered to an increasing number of rural customers and as of December 31, 2015, the contribution of the latter was 29% in the AUM. As of September 30, 2015, the company was the largest MFI in India in terms of geographical spread. (Source: Bharat Microfinance Report 2015 and the MFIN Micrometer Report, September 2015). As of December 31, 2015, Ujjivan had 470 branches across 24 states and union territories and 209 districts in India. The deep penetration of distribution network to remote unserved and underserved regions of India has enabled the company to develop the expertise to understand and differentiate customers on the basis of their specific requirements. Ujjivan served over 2.77mn active customers as of December 31, 2015. As a result of a customer centric approach, the customer retention rates have improved to 88%. Source: RHP, India Infoline Research
Page 7 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Paperless processing of documents at branches has resulted in low turnaround time
Average number of borrowers per field staff (for Group Loan products) has increased significantly
Effective credit risk management is reflected in robust repayment rates, stable portfolio at risk and low GNPA and NNPA Mr. Samit Ghosh, CEO & MD, has over 30 years of experience in banking industry
Technology driven operating model The digitized front end, consisting of android phones for group loans and tablets for individual loans enables the company to analyze the customer information, financial position and credit bureau details of a potential customer in real time. The paperless processing of applications and documents at branches has enabled efficient document management resulting in low turnaround time. Further, an automated backend, supported by a robust core banking system and document management system, has improved efficiencies and minimized turnaround time. Over the years, the use of technology has improved work place engagement and governance, increased the accessibility of products to the customers and enabled Ujjivan to rapidly scale up operations in a secure and efficient manner.
As a result of the efficiencies introduced by the technology infrastructure, the average number of borrowers per field staff (for Group Loan products) has increased from 428 in FY12 to 688 as of December 31, 2015. The decentralized management structure enables the company to effectively manage turnaround time which has reduced significantly from 7.94 days in FY13 to 4.49 days as of December 31, 2015 for Group Loan products, and from 17.26 days in FY13 to 8.06 days as of December 31, 2015 for Individual Loan products.
Robust risk management framework Ujjivan has a strong credit function, which is independent of the business and a key controller of the overall portfolio quality. The company has implemented credit management models such as decentralized loan sanctioning and stringent credit history checks which have enabled it to maintain a stable portfolio quality. The effective credit risk management is reflected in the portfolio quality indicators such as robust repayment rates, stable portfolio at risk (PAR) and low rates of GNPA and NNPA. Ujjivan’s portfolio quality has remained consistent in spite of the increase in the size of operations and diversification into new products, customer segments and regions. An active portfolio management ensured that no single state contributed more than 20% of the Gross AUM.
Professional management, experienced leadership and strong corporate governance Ujjivan is a professionally managed company with the senior management team having a diversified track record in the financial services industry and an average experience of ~20 years. The Chief Executive Officer and Managing Director, Mr. Samit Ghosh, has over 30 years of experience in banking industry. He has been a part of the management teams at Citibank, Standard Chartered Bank, HDFC Bank and Bank Muscat. In the past, he has also served as president of MFIN, which is an umbrella self‐regulatory organization for MFIs, as well as the chairman of AKMI. Company’s COOs, Ms. Carol Furtado, Mr. Abhiroop Chatterjee, Ms. Jolly Zachariah and Mr. Manish Raj who are in‐charge of regional operations and key enablers of the decentralized management structure, and Mr. Aryendra Kumar, Head, Housing Finance, have an average experience of 17 years in the financial services industry.
Page 8 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Eight MFIs received SFB license On October 7, 2015, RBI granted in‐principle approval to 10 entities to set up Small Finance Banks which included eight MFIs, one local area bank and one NBFC. The fact that eighty percent of the institutions receiving green signal for SFBs are MFIs outlines the significance of microfinance for the Indian banking landscape. The eight MFIs cumulatively accounted for about 26% of assets managed by the industry as of 2014‐15. As they exit the industry, after metamorphosing into SFBs along with Bandhan (which converted into a universal bank and accounted for 20% of March 2015 AUM), the industry size will halve. Market share of MFI players as of March 2015
Suryoday, 1
Source: MFIN, CRISIL Research
MFI Industry AUM projection MFIs gaining market share from Banks
0
20,000
40,000
60,000
80,000
100,000
120,000
2007‐08
2008‐09
2009‐10
2010‐11
2011‐12
2012‐13
2013‐14
2014‐15
2015‐16E
2016‐17E
2017‐18E
(Rs cr)
5764 61 57
51
4336 39 43
49
0%
20%
40%
60%
80%
100%
2010‐11 2011‐12 2012‐13 2013‐14 2014‐15
(%)Banks MFI
Source: RHP, India Infoline Research
Page 9 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Ujjivan would float a wholly owned subsidiary, which will be the proposed SFB, and transfer the existing business to it In the First stage, company will implement regulatory structure, redesign products, implement advanced technology, and train human resources
In the Second stage, company will focus on consolidation to operationalize primary and secondary channels for banking
In the Third stage, company plans to ramp up geographic expansion and pursue new customer segments and product.
The Small Finance Bank Transition Process On October 7, 2015, Ujjivan received in‐principle approval from the RBI (“SFB In‐Principle Approval”) to set up an SFB within 18 months from the date of receipt of the approval. In order to satisfy the criteria for corporate structure, ownership and control prescribed under the SFB Guidelines, Ujjivan would float a wholly owned subsidiary and transfer the existing business to the subsidiary, which will, in turn, be the proposed SFB.
The management proposes to handle the transition to an SFB through a three‐phase strategy comprising of the preparation, transformation and growth stages.. The transformation phase is proposed to be followed in the first two years of banking operations, followed by the phase of growth.
Stage 1 ‐ Prepare The first stage in the transition journey would comprise of rolling out readiness initiatives to set up an SFB. While maintaining the existing infrastructure of delivery channels, Ujjivan’s would implement the regulatory structure, redesign products, implement advanced technology, and train human resources. Ujjivan has already initiated the preparation stage by putting in place a SFB transition committee comprising of Board members and key managerial personnel, and engaged third party consultants to formulate a detailed implementation plan.
Stage 2 ‐ Transform In this stage, the company does not intend to add new branches and instead, would focus on consolidation to operationalize primary and secondary channels for banking. Further, it would be adding to the existing product delivery channels and introduce additional product lines including savings, deposits and fee‐based services.
Stage 3 ‐ Grow In the growth phase, which is anticipated to start three years from the start of operations of the proposed SFB, the company plans to ramp up geographic expansion through the addition of new branches, and pursue new customer segments and products. In addition to this, Ujjivan will focus on growth in open market customers.
Proposed Holding and Corporate Structure
Source: RHP, India Infoline Research, * Without considering the dilutive impact of outstanding employee stock options, ^ Assuming full subscription in the Offer
Page 10 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Ujjivan would float a wholly owned subsidiary, which will be the proposed SFB, and transfer the existing business to it To focus on unserved and underserved segments and capitalize on the lack of viable savings and product options Company would be developing a wide range of simple savings, credit and fee‐based products Company intends to increase the penetration of individual loan products by designing need‐specific products
Leveraging capabilities as an MFI to successfully transition into the proposed SFB Ujjivan’s experience of working with the unserved and underserved population segments will enable it to develop relevant products and channels to serve this market well. Further, company’s extensive branch network across India, centralized processing units across four regions, modern technology and human resources will be key building blocks in its transformation into an SFB. Increased focus on the unserved and underserved segment There is a large unserved and underserved segment of the population, generally referred to as the ‘missing middle’, which is not adequately served by standard MFIs or commercial banks on account of their informal income profile or low savings profile. This segment essentially consists of MSEs, low income salaried workers, and tenant and marginal farmers. Ujjivan intends to increase focus on this segment and capitalize on the lack of viable savings and product options, inadequate customer services offered by informal, unorganized avenues of credit, and the resultant financial exclusion of this population segment. The company would be developing a wide range of simple savings, credit and fee‐based products for facilities such as cash management and overdraft specifically targeted towards the ‘missing middle’. Diversifying product offerings The SFB regime will enable Ujjivan to develop and offer a comprehensive suite of products including saving accounts, current accounts, fixed deposits, overdraft facilities and recurring deposits; and basic fee based products. The company proposes to offer simple and flexible liability products to its customers. To make these products accessible, it will focus on delivery channels such as a three‐tier branch structure, business correspondents, ATMs, mobile and internet, etc. While initially these delivery channels will be assisted, the management plans to gradually convert them into self‐service channels. Leveraging existing customer base Ujjivan intends to increase the ticket size while relying on the established credit assessment procedures and risk management framework to ensure a high quality portfolio. Ujjivan intends to capitalize on this trend by increasing the penetration of individual loan products, and by innovating and designing need‐specific products and processes. In addition to the transition from Group Loan products to individual loan products, the management also intends to increase the proportion of secured products, thereby further enhancing quality of the credit portfolio.
Page 11 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Subsequent to the transformation into the SFB, the company proposes to raise a part of its funding through retail customers deposits.
Building a strong liability franchise Historically, Ujjivan has relied on a combination of wholesale funding from banks and DFIs, equity infusions, issue of debt instruments such as commercial paper, non‐convertible debentures and securitization of loan portfolio to fund its business and operations. Subsequent to the transformation into the SFB regime, the company proposes to raise a part of its funding through retail customers deposits. Currently, a large part of its target population segment is offered savings and other deposit products only by various unorganized players. Management believes that with simple, flexible products which are accessible through assisted and self‐serviced channels, Ujjivan can position as a reliable alternative to the informal players. The shift will enable the company to access diversified, short term and low‐cost capital. Subsequently, a majority of its funding requirements would be met through CASA deposits and recurring and fixed deposits by building a sticky deposit base (remittances, cash management services) and attracting new customers whose primary avenues of savings and capital building currently include the unorganized sector and other high risk savings schemes.
Page 12 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Post conversion, Ujjivan would come under regulatory oversight of the RBI Efficient use of technology, better accessibility, marginally higher rates, strong brand, etc. could help attract deposit customers
Key advantages of conversion into SFB Better regulatory oversight and broader product mix While the microfinance industry is currently not regulated by a formal body, the MFIs will benefit post conversion as they come under regulatory oversight of the RBI. This will eliminate the possibility of adverse interventions by state governments as with the Andhra Pradesh ordinance. The SFBs will also benefit from a competitive advantage over other MFIs as the SFBs will be able to offer a wider range of products on assets as well as liability side thus increasing the stickiness of the customer. This will also help the SFBs scale up their business faster and reduce the concentration risk. Ability to raise low cost deposits The higher the proportion of low cost deposits the bank can raise the lower will be its overall cost of funds. Factors like efficient use of technology, better accessibility, marginally higher interest rates, strong brand etc. could help attract customers. Also, SFBs initially might primarily target term deposits, which are at higher rates compared to demand deposits (current and savings deposits). However, the competition in this segment is expected to increase with payment banks too entering the fray. Thus the benefit if at all, is expected to accrue only over the long term. (Source: CRISIL Research: Microfinance, November 2015)
How are MFIs different than Commercial Banks? NBFC‐MFIs provide financial services pre‐dominantly to low‐incomeborrowers, with small loan amounts and for short tenures. The financialservices are provided on an unsecured basis, mainly for income‐generatingactivities with repayment schedules which are more frequent than thosenormally stipulated by commercial banks. While NBFCs lend and makeinvestments and hence their activities are akin to those of banks, as opposedto commercial banks, (a) NBFCs cannot accept demand deposits; (b) NBFCsdo not form part of the payment and settlement system and cannot issuecheques drawn on itself; and (c) the deposit insurance facility of the DepositInsurance and Credit Guarantee Corporation is not available to depositors ofNBFCs. On the other hand, certain characteristics specific to NBFC‐MFIs which arenot prevalent amongst commercial banks, inter alia, are (a) focus onvulnerable sections of the population, who lack individual bargaining powerand have inadequate financial literacy; (b) deeper reach in remotegeographical regions as a result of adopting an information approachcompared to banks, which still operate through traditional branches; (c)using more of the local population as field workers which gives them betteraccess to borrowers as opposed to banks which largely use traditional staff;and (d) simpler and less time consuming procedures. (Source: RBI FAQs onNBFCs, updated as on March 11, 2016 and the Report of the Sub‐Committeeof the Central Board of Directors of the Reserve Bank of India to Study Issuesand Concerns in the MFI Sector, January 19, 2011).
Page 13 of 14
Ujjivan Financial Services Ltd. Please note that this document is for information purpose only.
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
Financials
Income statement Y/e 31 Mar (Rs Cr) FY13 FY14 FY15 9MFY16
Revenue from Ops 223 348 599 713
Other Income 11 10 13 16
Total Revenue 234 358 612 730
Employee benefit exp (66) (81) (133) (143) Provision/writeoff for receivables under fin (7) (8) (21) (17)
Finance costs (82) (140) (271) (306)
Depr and amor. exp (3) (3) (7) (6)
Admin and other exp (29) (36) (65) (71)
Total expenses (186) (269) (497) (542)
Profit before tax 48 89 115 188
Tax expense (15) (30) (39) (65)
Net profit 33 58 76 122
Balance sheet Y/e 31 Mar (Rs Cr) FY13 FY14 FY15 9MFY16
Equity Capital 66 66 86 86
Reserves 252 307 650 773
Shareholder's funds 318 373 736 859
Long‐term borrowings 383 565 1,283 1,507
Long‐term provisions 1 2 6 10 Total Non‐current liabilities 385 567 1,289 1,518
Short Term Borrowings 4 2 5 62
Trade payables 5 5 12 15
Other current liabilities 631 1,108 1,892 2,246
Short term provisions 14 23 43 55
Total Current liabilities 654 1,139 1,951 2,377 Total Equities and Liabilities 1,357 2,079 3,976 4,753
Fixed Assets
‐Tangible Assets 8 10 14 16
‐Intangible Assets 3 3 4 6
Non‐current investments 0 0 0 0
Deferred tax assets (Net) 6 7 15 22 Long term loans and advances 3 5 7 14
Other non‐current assets 188 238 599 997
Total Non‐current assets 209 263 639 1,055 Receivables under financing activity 947 1,388 2,630 3,555
Cash and bank balances 179 394 645 56 Short‐term loans and advances 6 11 21 34
Other current assets 16 23 42 53
Total Current assets 1,148 1,816 3,338 3,698
Total Assets 1,357 2,079 3,976 4,753
Key Ratios Y/e 31 Mar FY13 FY14 FY15 9M FY16
Profitability Ratios (%)
NIM* 13.8 13.6 11.6 12.3
Return on Avg Assets * 2.9 3.4 2.5 3.7
Return on Avg Equity* 11.8 16.9 13.7 20.4
Per share ratios (Rs)
EPS* 5.3 8.9 11.2 14.2
BVPS 45.4 53.4 81.8 93.9
DPS 0.3 0.5 0.5 ‐
Other key ratios (%)
Yield* 22.7 23.7 22.8 22.7
Cost of Funds* 10.1 10.5 11.3 11.8
Spread 12.6 13.2 11.5 10.9
Opex/Average AUM* 10.8 8.8 8.5 7.6
GNPA 0.1 0.1 0.1 0.2
NNPA 0.1 0.0 0.0 0.0
CAR 27.3 22.7 24.2 19.6
Tier I 27.0 21.8 21.7 17.8
Cost/Income 78.2 65.1 73.5 61.8
AUM/branch (Rs cr) 3.7 4.6 7.6 9.7
AUM/employee (Rs cr) 0.3 0.3 0.5 0.6 * Annualized for 9M FY16
Page 14 of 14
For additional information and risk factors please refer to the Draft Red Herring Prospectus/ Red Herring Prospectus.
DISCLAIMER
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We, IIL and our affiliates, officers, directors, and employees may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of the company mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as advisor or lender / borrower to the company or have other potential conflict of interest with respect to any recommendation and related information and opinions. The information contained herein this document is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. The information contained herein is subject to change without any prior notice. IIL reserves the right to make any modifications or alterations to this statement as may be required from time to time. However, IIL is under no obligation to update or keep the information current. 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The Draft Red Herring Prospectus/ Red Herring Prospectus can be accessed at: iiflcap.com
Published in 2016. © India Infoline Ltd 2016