Religare Enterprises Limited. Corporate Overview

Transcription

1 Religare Enterprises Limited Corporate Overview September 2016

2 Religare Overview Religare is focused on the most promising opportunities in the financial services space in India Religare Snapshot Leading financial services platform Religare Enterprises Limited (REL) through its subsidiaries has established itself in some of the most promising verticals within Financial Services, viz. Lending, Health Insurance and Capital Markets Nationwide distribution footprint Subsidiaries service over 1.14 mn. clients from over 1,450 locations with more than 7,200 employees Professional management team Stable team with average senior management tenure of ~7 years and experience of ~18 years Key Financials (as at/quarter ended 31-Mar-2016) Net worth: 3,863 cr. (USD 584 mn.) Total assets: 27,429 cr. (USD 4.15bn.) Total revenues: 4,503 cr. (USD 689 mn.) Pre-exceptional PAT: 225 cr. (USD 34.5 mn.) Market information Listed on NSE and BSE: market capitalization of 4,975 cr. (~USD 753 mn.) as of 30-Jun-2016 Business Lines Lending Leading SME-focused NBFC with deep domain knowledge SMEs are constrained by lack of funding; the gap presents a lucrative opportunity for specialist financiers Tapping the growing opportunity in lending for affordable housing Health Insurance One of five standalone health insurers in India Low insurance density; health insurance in particular growing rapidly due to rising cost of healthcare and disproportionate share of out-ofpocket expenditure Capital Markets Large retail broking platform, open architecture wealth management platform a and mid-market focused institutional equities and investment banking platform Immense opportunity from structurally high savings and low penetration of financial assets; equities in particular to benefit Each of the verticals has attained critical scale and is proposed to be independently listed on the stock exchanges in order to sharpen focus on the individual businesses, simplify structure and unlock value for stakeholders 1

3 Distinguished Board and robust governance structure The Board is comprised of highly accomplished individuals from diverse backgrounds REL s Board of Directors Mr. Malvinder Mohan Singh Non-Executive Chairman Mr. Shivinder Mohan Singh Non-Exec Vice-Chairman Mr. Sunil Godhwani Whole-time Director & CEO Mr. Harpal Singh Director Mr. Virendra Kumar Madan Director Mr. Monish K Dutt Nominee Director of IFC Mr. Ravi Mehrotra Director Mr. A C Mahajan Independent Director Former CMD Canara Bank, Allahabad Bank Ms. Sangeeta Talwar Independent Director Former MD NDDB Dairy Services Pvt. Ltd. Mr. Rashi Dhir Independent Director Mr. Padam Bahl Independent Director Mr. Deepak R Sabnani Independent Director Mr. R. K. Shetty Independent Director 2

4 Capital Markets Lending Health Insurance Professional management with vast experience and long tenure Companies managed by independent management teams under Group Executive oversight Key Leadership Sunil Godhwani, Whole-Time Director & CEO Religare Enterprises (Joined Religare in 2001) Established the vision for the group and provides strategic direction. His leadership has helped Religare transform from a standalone broking business to a diversified financial services group. Leads and manages strategic acquisitions and expansion for the group Anil Saxena, Group Chief Financial Officer Religare Enterprises (Joined Religare in 2001) Core member of the team responsible for the transformation of Religare group into one of India s leading financial services group. Responsible for the overall supervision of the finance function and execution of all strategic matters of the group. Over 24 years of experience in the financial services industry Sunil Garg, President - Treasury Religare Enterprises (Joined Religare in 2004) Responsible for the treasury function at the group level overseeing large debt and investment transactions, and providing strategic direction to the businesses. Over 22 years of experience in the industry Kavi Arora, Managing Director & CEO Religare Finvest Over 23 years experience Anuj Gulati, MD & CEO Religare Health Insurance Over 20 years experience Nitin Jain, MD & CEO Religare Securities Sriram Iyer, CEO Religare Wealth Mgmt. Gautam Trivedi, CEO India, Religare Capital Mkts. Over 20 years experience Over 22 years experience Over 24 years experience

5 Robust platform in place to capture opportunities in financial services Multi-product manufacturing capabilities and distribution network Lending SME-focused Lending Balance sheet size of 21,049 cr. (USD 3.18 bn.) High quality portfolio: net NPA of 2.31% (90-day basis) Capital adequacy (CRAR) of 16.7% Affordable Housing Finance Loan book of 829 cr. (USD 126 mn.) Health Insurance Health Insurance Leveraging group s healthcare assets GWP of 503 cr. (USD ~77 mn.); YOY growth of 82% 4,869 hospitals in provider network Multi-channel distribution including significant online presence Capital Markets Retail Broking Distribution across more than 440 cities, 1,320 locations and catering to over 1.14 mn. clients Wealth Management Advisory-led open architecture platform Institutional Equities and Investment Banking India institutional research team covers 155 stocks Empanelled with more than 450 clients globally All data as at/for the quarter ended 31-Mar

6 Religare Operating Businesses Religare is poised to capture the buoyancy in Financial Services Financial Services highly correlated to economic growth and will gain from India s superior growth trajectory The Indian economy is the fastest growing large economy; set to sustain world leadership in GDP growth rate Financial Services businesses are highly correlated with economic growth; at India s current stage of development, Financial Services is likely to grow at a multiple of the broader economy, unlocking the structural potential across the spectrum Lending Providing debt capital to power growth of SMEs and affordable housing Health Insurance Protection for individuals, SMEs Capital Markets Channelising risk capital to the markets Leading financial services platform with presence across three verticals Focus on servicing entire customer spectrum Judicious mix of balance sheet-led and fee-based businesses Retail and Mass Retail Higher savings from rising incomes HNIs Allocating growing wealth across asset classes SME & Mid-corporates Debt financing, equity raise, M&A, ECM Financial Institutions Capital flows tracking superior returns Target Customer Segments 5

7 Key Businesses Overview

8 Lending Business Overview NBFC Balance Sheet Size 21,049 cr. (USD 3.18 bn.) Improve ROE Business Highlights Affordable Housing Finance book size of 829 cr. (USD 126 mn.) (as of 31-Mar-2016) Strategic Priorities Grow Book Size Ensure High Quality Portfolio SME Lending One of India s largest Non-Banking Financial Companies, focusing on the SME segment Offerings Capital Market Lending Affordable Housing Finance Recognition 8% 62% CIBIL Fast and Upcoming Data Quality Award

9 Religare Finvest SME-Secured drives growth in book size Key highlights Growth capital provider focused on fast-growing SME segment The sector contributes 17% to India s GDP, 45% to manufacturing output and 40% to the total value of exports Strong performance across credit and operating benchmarks Secured asset finance portfolio over 83% Net NPA of 2.31% on 90-day basis and 1.77% on 150-day basis as at 31-Mar-2016 Significant headroom for operating leverage through tested management strength, processes and systems Winner of The Most Innovative Risk Management Strategy at the ERM Leadership Summit and CIBIL Fast and Upcoming Data Quality Award Continued traction in SME-Secured segment: book size up 29% YOY ( cr.) (USD bn.) 16,313 14,631 15,536 13,274 13, , , , , , , , Mar-15 11, , Jun-15 Non-Performing Assets 2.24% 1.69% 1.63% 1.19% SME-Unsecured* Others 11, , Sep-15 SME-Secured* Capital Market Lending Mar-15 GNPA 90 dpd NNPA 90 dpd 2.86% 2.21% 8 12, , Dec-15 13, , Mar-16 *Net of portfolio assigned to other lenders NPAs are recognised at 90 days since Oct 2011 whereas regulations require transitioning from 180-day NPA recognition to 90-day recognition by 31-Mar % 2.29% 1.99% 3.49% 2.78% 2.17% 1.65% 1.46% 1.64% 1.19% 30-Jun-15 GNPA 150 dpd NNPA 150 dpd 30-Sep Dec-15 GNPA 180 dpd NNPA 180 dpd 2.31% 3.07% 2.44% 1.77% 31-Mar-16 NIM and Opex to ANR 4.59% 2.47% Q4FY % 2.19% Q1FY16 NIM 4.54% 2.37% Q2FY16 Opex/ ANR 4.13% 2.42% Q3FY16 Borrowing programme supported by superior ratings Rating Type Rating Agency Amount cr. 4.23% 2.06% Q4FY16 USD mn. Commercial Paper [ICRA] A1+ ICRA 2, ST Debt [ICRA] A1+ ICRA 1, ST Bank Loans [ICRA] A1+ ICRA LT Debt [ICRA] AA- (stable) ICRA 3, LT Bank Loans [ICRA] AA- (stable) ICRA 11,400 1,725 Market-Linked Deb. ICRA pp-mld AA- ICRA Tier-2 Sub. Debt IND AA- (stable) Ind-Ra Commercial Paper IND A1+ Ind-Ra 3, ST Bank Loans IND A1+ Ind-Ra 3, LT Debt IND AA - (stable) Ind-Ra 3, LT Bank Loans IND AA - (stable) Ind-Ra 10,000 1,513 Additionally obtained Long Term rating of CARE AA- for 1,400 mn. [~USD 212 mn]

10 Religare Housing Development Finance Corporation Targeting the growing opportunity of lending for affordable housing Key Highlights Traction in disbursements, book size increased 96% YOY Significant shortfall of housing units in India; urban housing shortage of mn. units with majority among the low income group and the economically weaker sections Housing for All scheme by the Government aims to provide affordable housing to urban poor; 20 mn. houses to be built in urban areas by 2022 through financial assistance from the Central Government ( cr.) (USD mn.) RHDFC focuses on finance needs of first time home buyers for self use in the affordable housing segment Mar Jun Sep Dec Mar-16 Current loan book size of 829 cr. Net Interest Margin and Non-Performing Assets Portfolio of products offered include NIM GNPA NNPA Loans for home purchase 9.2% 8.3% 8.6% 8.1% 8.1% Construction finance loans to affordable housing developers Loan against residential property for business purpose RHDFC has created a distinct underwriting framework to evaluate ability and intent of the borrower; additional parameters assessed include qualitative checks 1.9% 1.3% Q4FY15 1.7% 1.1% Q1FY16 1.7% 1.2% Q2FY16 2.1% 1.5% Q3FY16 1.0% 0.7% Q4FY16 9

11 Health Insurance Business Overview Business Highlights GWP of 503 cr. (USD 77 mn.) in FY16 4,869 hospitals in provider network Strategic Priorities Grow GWP with efficient use of Capital (as of 31-Mar-2016) Retail & Group Health Plans Positioned to capture significant Group Synergies Offerings Retail & Group Accident Plans International Travel Plan Recognition FICCI Healthcare Excellence Award

12 Religare Health Insurance Robust distribution aiding in rapidly achieving scale Key Highlights Fourth standalone health insurer to be set up in India Equity participation of 5% each by Union Bank of India and Corporation Bank Pan-India coverage through 56 offices Multi-channel distribution strategy through Agency, Brokers, Corporate Agents, Online and Bancassurance Gross Written Premium (GWP) of 503 cr. (USD 77 mn.) in FY16; increase of 82% over the previous year Bouquet of 12 products covering health, personal accident, critical illness and travel Performance of standalone health insurers PSU Private SAHI No. of companies No. of years in existence GWP* FY15 ( cr.) 13,501 6,154 2,928 GWP* FY16 ( cr.) 16,308 6,908 4,154 YOY Growth 21% 12% 42% GWP* FY15 (USD mn.) 2,211 1, GWP* FY16 (USD mn.) 2,497 1, *Health & Personal Accident only; Source: Industry Reports Gross written premium ( cr.) (USD mn.) Q4FY Q1FY Consistently expanding the Hospital Network GWP 161 Q2FY16 Q3FY16 Q4FY16 4,409 4,532 4,630 4,768 4,869 Q4FY15 Q1FY16 Q2FY16 Q3FY16 No. of network hospitals Q4FY16 11

13 Capital Markets Business Overview Business Highlights 1.14 mn. Retail Broking clients Wealth Mgmt. AUM 4,055 cr. (USD 613 mn.) 155 stocks under Research coverage Strategic Priorities Generate Superior ROE Attain Sustainable Profitability (q.e. 31-Mar-2016) A formidable capital markets platform with extensive distribution capabilities Offerings Retail Broking Wealth Mgmt Institutional Equities and Investment Banking Recognition Leveraging Digital and Technology for Business Growth Award at the Skoch BSE Award For Aspiring India

14 Religare Securities & Religare Commodities Market environment remained challenging during the financial year Key Highlights One of India s largest retail broking networks Asset light broking model to enhance efficiency Growing use of online and mobile platforms by customers Focus on compliance adherence and improvement in customer service and experience Pricing standardized to improve yields in the equities and commodities segments Steady growth in equities and commodities broking clients total client base of over 1.14 million # Average Daily Turnover Religare turnover (ADTO # - cr.) 1, Focus on distribution network productivity (Nos.) 8.3 Q4 FY15 1,494 1,439 1, ,352 1, ,302 1,250 1,201 1,184 1, Mar-15 Equity Jun Q1 FY16 Commodity Q2 FY16 Own Branches 30-Sep Q3 FY16 31-Dec-15 Currency Q4 FY16 Franchisees 31-Mar-16 Business update Challenges from the macro environment, primarily global, caused market-wide turnover to decline during the first nine months of the financial year; but increased in Q4FY16 over previous quarter driven by Options Religare s performance has been resilient in the face of a challenging market environment in FY16 Religare s total traded volume in FY16 was 12.8 trillion from approx. 135,000 unique traded clients. Asset-light channels contributed ~73% of total revenue in Q4FY16 Quality of relationship continues to be the focus in new client acquisition, third party sales and BP acquisition. Yield has improved by 15% in equity segment, owing to focus on standardized pricing

15 Religare Wealth Management Differentiating through a focused idea-driven approach Key Highlights Client Base AUM Key value proposition of No. of Clients ( cr.) Total AUM Simplified Wealth Solutions for the customers 4,549 4,523 4,507 4,477 4,514 (USD mn.) Seen as trusted advisors to clients, enabled by our tripod delivery model 4,631 4,492 4,662 4,687 4,972 4,400 3,945 4,029 4,008 4,055 Active advisory calls helping clients position portfolios to gain from high-impact events Expanding product solutions to enhance ability to win clients across the group Size and scale aligned to market Focus on Relationship Manager productivity 31-Mar-15 Relationship Manager productivity cr. (USD mn.) Mar Jun Jun Sep Sep Dec Dec Mar Mar Mar-15 Business update 30-Jun Sep Dec Mar-16 Inflows into Equity PMS schemes has become one of the key contributors to the business, with significant traction also having been built up in Structured Products and Real Estate backed high-yielding NCDs Incrementally equity MF sales have declined given the mood in the market. All the same, trail income contribution to revenue has improved significantly as an outcome of the focus on building an annuity book 14

16 Religare Capital Markets Poised to capitalise on multi-decade growth story in India Key Highlights Select deals completed during FY2016 Mid-market focused institutional equities and investment banking platform Mar cr. Jan cr. Jan cr. Aug cr. Investment Banking platform offers life-cycle investment banking services i.e. growth capital raise to IPO to QIP to Block placements Crompton Greaves Closed calendar year 2015 as the No. 2 QIP manager in Block Debt Syndication Open Offer Block India for transactions of more than USD 10 mn. (excluding transactions for BFSI companies) Sole Placement Agent Arranger Lead Manager Sole Placement Agent Equity transactions of size aggregating to 940 cr. (USD 144 mn.) successfully executed during FY16 Differentiating through original, on-the-ground research Syndicated multiple debt issues aggregating to 440 cr. (USD 67 mn.) during FY16 20 analysts in India s Institutional Research team cover 155 stocks Equities businesses serve 452 clients globally with differentiated research 15

17 Financial Services Opportunity in India

18 Gap in funding for SMEs presents a lucrative opportunity for specialist financiers SMEs constitute a large contributor to national output and exports SME Lending Credit flow to the sector has improved in recent years as the potential of the sector is better understood 45% 40% Bank credit to SMEs ( billion) 1,260 2,160 2, % 3,660 4,860 5,280 6, Share of SMEs in India s manufacturing output Share of SMEs in India s total exports The SME sector is one of the largest generators of employment in India, employing 73 million people. The sector has been observed to outpace GDP growth in years of high growth. However, providing credit to the sector commensurate with its contribution to national output is too daunting a task for banks Outstanding SME credit as % of total outstanding bank credit 16.5% Share of SMEs in banks industry and services portfolio 24.0% SMEs are the backbone of India s economy but are constrained by lack of funding; specialist NBFCs with deep understanding of the workings of SMEs are crucial for bridging the gap Source: CRISIL 17

19 Health Insurance is on a high growth trajectory Health Insurance 22 Health Insurance GWP ( bn.) 27% Out-of- Pocket as % of Total Healthcare Expenditure 9% 11% 31% 35% 35% 59% FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 UK US BR RU CN IN Total premium (USD bn.) xx% GWP as % of GDP 17.90% 1% 15% 4% 4% 12% 7% 3% 12% 11% 8% ,259 Healthcare spend as a % of GDP 4.00% 5.40% 6.30% 9.30% 9.40% RU ZA IN BR KR DE CN UK JP US IN CN RU BR UK US Non-life insurance penetration in India is a mere 0.7% and Health Insurance is growing rapidly as healthcare costs are spiraling and share of out-of-pocket expense is among the highest Source: Reserve Bank of India, World Bank, Economist Intelligence Unit, India Brand Equity Foundation, Karvy, Industry reports, Swiss Re, IRDAI SG=Singapore, MY=Malaysia, KR=S. Korea, JP= Japan, TH=Thailand, IN=India, ID=Indonesia, CN=China, RU=Russia, ZA=South Africa, DE=Germany, UK=United Kingdom, US= United States 18

20 Surge in wealth and reallocation across asset classes to revive interest in Equities Capital Markets Wealth Management 38% 252 SG 30% 160 MY xx% Cash Trading Velocity Market cap*/gdp (%) 104% 143% 106% 45% 33% % KR JP TH IN ID CN Total wealth of Ultra High Net Worth Individuals in India ( trillion) E +89% E Distribution of individual wealth in India invested in financial assets ( trillion) E +162% Equity Bank Deposits/ Bonds Insurance Small Savings/Cash Provident Fund Mutual Funds Others Distribution of Ultra High Net Worth Individuals by Age Group 73% 17% 10% India 59% 26% 15% Asia-Pacific 26% 35% 39% US Under Over 65 Equity-related businesses to benefit from tailwinds as India is under-penetrated c.f. regional peers and a correction to under-ownership of equities is imminent Total wealth of UHNIs set to grow nearly 90% in 5 years; younger UHNI age profile provides opportunity to innovate and make intense use of technology Source: Reserve Bank of India, World Bank, Economist Intelligence Unit, India Brand Equity Foundation, Karvy, Industry reports Market Capitalization for US is of NYSE and for China of Shanghai Stock Exchange; Cash Trading velocity is defined as annual cash turnover divided by market capitalisation; Data for 31-Dec-2013 for all countries except India which is for 31-Mar SG=Singapore, MY=Malaysia, KR=S. Korea, JP= Japan, TH=Thailand, IN=India, ID=Indonesia, CN=China;

21 REL and Key Subsidiaries Financials

22 REL s financial performance is at an inflection point Businesses set to deliver substantial improvement in performance as consolidation phase complete Multiple actions taken to consolidate operations over the past four years Reduced REL-level debt by monetizing investments Restructured Lending Business balance sheet Matched liability profile with assets Held asset base constant between FY12 and FY14 putting prudence ahead of growth Consolidated retail broking presence to rein in fixed costs Rationalized own branches from peak of ~400 to under 200 now Focus on asset-light channels; now generating ~73% of revenues Rationalized size and scope of investment banking business Focused as a mid-market investment bank, with near operating breakeven in FY16 Consolidated financial performance on an improving trajectory ( cr.) REL Consolidated Revenue REL Consolidated pre-exceptional PBT after MI REL Consolidated pre-exceptional PAT USD mn ,187 4, , FY14 FY15 FY16 FY14 FY15 FY16 FY14 FY15 FY16 21

23 Operating Companies Financial Highlights (1/3) Religare Enterprises Limited ( cr.) Religare Finvest Limited ( cr.) Consolidated Income Statement FY14 FY15 FY16 Total Income 3,472 4,187 4,503 Operating and Administrative Expenses 999 1,266 1,172 Personnel Expenses Interest and Finance Charges 1,579 1,652 1,872 Depreciation Less: Net Expenses of JV Recoverable (48) (52) (47) PBT before exceptional items PAT before exceptional items Exceptional items (80) - (273) Profit after tax, as reported (69) 154 (48) Consolidated Balance Sheet 31-Mar Mar Mar-16 Shareholders' Funds 3,188 3,909 3,863 Minority Interest Non-Current Liabilities 8,901 11,110 13,078 Current Liabilities 8,811 10,201 10,304 Total Liabilities 21,125 25,439 27,429 Non-Current Assets 11,941 15,136 17,934 Current Assets 9,185 10,303 9,496 Total Assets 21,125 25,439 27,429 Income Statement FY14 FY15 FY16 Total Income 2,016 2,163 2,528 Operating and Administrative Expenses Personnel Expenses Interest and Finance Charges 1,260 1,322 1,581 Depreciation Profit before Tax Profit after tax Balance Sheet 31-Mar Mar Mar-16 Shareholders' Funds 2,273 2,377 2,822 Non-Current Liabilities 5,169 8,019 10,348 Current Liabilities 6,697 6,733 7,879 Total Liabilities 14,139 17,130 21,049 Non-Current Assets 7,315 10,068 13,665 Current Assets 6,824 7,062 7,384 Total Assets 14,139 17,130 21,049 22

24 Operating Companies Financial Highlights (2/3) Religare Housing Development Finance Corp. Ltd.* ( ( cr.) Religare Health Insurance Co. Limited* ( ( cr.) Income Statement FY14 FY15 FY16 Total Income Operating and Administrative Expenses Personnel Expenses Interest and Finance Charges Depreciation Profit before Tax Profit after tax and Minority Interest Income Statement FY14 FY15 FY16 Net Earned Premium Net Claims Incurred & Net Commission Operating and Administrative Expenses Personnel Expenses Investment & Other Income Profit before Tax (80) (99) (79) Profit after tax & Minority Interest (72) (89) (71) Balance Sheet 31-Mar Mar Mar-16 Balance Sheet 31-Mar Mar Mar-16 Shareholders' Funds Non-Current Liabilities Current Liabilities Total Liabilities Non-Current Assets Current Assets Total Assets Shareholders' Funds Non-Current Liabilities Current Liabilities Total Liabilities Non-Current Assets Current Assets Total Assets *Financial statement represents 100% of the entity. Minority Interest is reduced from PAT. 23

25 Operating Companies Financial Highlights (3/3) Retail Broking (RSL, RCL, RCTL and RCDMCC)* ( cr.) Religare Wealth Management Limited ( cr.) Income Statement FY14 FY15 FY16 Total Income Operating and Administrative Expenses Personnel Expenses Interest and Finance Charges Depreciation Profit before Tax Profit after tax Balance Sheet 31-Mar Mar Mar-16 Shareholders' Funds Non-Current Liabilities Current Liabilities 952 1,314 1,028 Total Liabilities 1,478 1,860 1,597 Non-Current Assets Current Assets 1,080 1,534 1,337 Total Assets 1,478 1,860 1,597 Income Statement FY14 FY15 FY16 Total Income Operating and Administrative Expenses Personnel Expenses Interest and Finance Charges Depreciation Profit before Tax (11) (4) (8) Profit after tax (11) (4) (8) Balance Sheet 31-Mar Mar Mar-16 Shareholders' Funds Non-Current Liabilities Current Liabilities Total Liabilities Non-Current Assets Current Assets Total Assets *The combined abridged financials have been drawn up by line by line addition and not as per AS-21 issued by ICAI. 24

26 Notes

27 Notes

28 Religare Enterprises Limited A - 3,4,5, GYS Global, Sector - 125, Noida, U.P , India