Mahindra Finance Q2 net profit surges 55% to Rs 882 crore on volumes, lower credit cost

Mumbai: Mahindra & Mahindra Financial Services reported a 55% year-on-year rise in standalone net profit to Rs 882 crore for the quarter ended September 30, compared with Rs 569 crore a year earlier, helped by higher business volumes and lower credit costs.

Revenue from operations rose 15% to Rs 5,164 crore. Net interest income increased 17% to Rs 2,822 crore.

On a consolidated basis, net profit rose 61% to Rs 911 crore and consolidated total assets grew 21% to Rs 1.80 lakh crore.


Credit cost moderated to 1.6% of average total assets from 2.2% a year earlier, while net interest margin remained unchanged at 7%. The company is targeting a return on assets of 2.2%-2.5% by FY31, compared with 2.2% in the September quarter.

Disbursements rose 22% to Rs 16,499 crore, led by growth in SME and mortgage lending, Raul Rebello, MD & CEO, said speaking at an analyst call.

He said that the effort to diversify outside passenger and commercial vehicle finance has yielded results with 20% of consolidated lending AUM being non-wheel business and 80% from the wheel business.

M&M Finance is targeting a return on assets of 2.2%-2.5% by FY31, compared with 2.2% reported in the September quarter. Rebello said that the liquidity buffer is at an all-time high and may not be raised further even if it is not dipped into.

Business assets under management grew 15% year on year to Rs 1.47 lakh crore. Non-vehicle finance disbursements, including SME loans, personal loans and housing finance, increased 52%.

Passenger vehicle disbursements increased 28% to Rs 6,826 crore, while financing for pre-owned vehicles grew 15% to Rs 2,834 crore. Commercial vehicle and construction equipment disbursements rose 16% to Rs 2,657 crore, and tractor financing increased 13% to Rs 1,979 crore.

Asset quality improved from a year earlier, with gross Stage 3 assets declining to 3.4% from 3.9%. Stage 2 assets fell to 4.7% from 5.8%, while collection efficiency improved to 97% from 96%. The provision coverage ratio on Stage 3 assets stood at 56.6%. Pre-provisioning operating profit grew 20% to Rs 1,791 crore. Provisions and write-offs declined 16% to Rs 630 crore from Rs 751 crore.

The lender’s capital adequacy ratio stood at 18%, including Tier-I capital of 16.2%, at the end of September. Its liquidity buffer was more than Rs 16,150 crore.