Mahindra Finance disbursements rise 12% in July, stock trades flat

Mahindra & Mahindra Financial Services has reported overall disbursements of Rs 4,400 crore for July, indicating a growth of 12 percent on-year.

“Healthy disbursement trends in the current period have led to business assets at Rs 88,100 crore, a growth of 6.4 percent over March 2023 and 28 percent over July 2022,” the company said in an August 2 exchange filing.

The collection efficiency for the NBFC was at 96 percent for July 2023, compared to 95 percent a year back.

At 9:45am, the stock was quoting at Rs 290.95 on the NSE, lower by 0.7 percent from its previous close.

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The business update for July comes four days after the company reported its June quarter results. In Q1 FY24, Mahindra Finance reported consolidated net profit of Rs 362.22 crore, registering a growth of 51.01 percent from Rs 239.86 crore last year. Its total income increased by 25 percent YoY to Rs 3,637 crore.

However, the NBFC reported a net interest margin (NIM) of 6.8 percent, which was much lower than its 7.5 percent target for Mission 2025.

Credit costs as a percentage of loans for the quarter came in at 2.5 percent, much higher than the estimate of 1.8 percent. Provisions and write-offs at Rs 526 crore were 18 percent lower on-year, but significantly higher than nil provisioning in the March quarter.

Also Read: Mahindra Finance’s higher provisions, shrinking margins keep analysts concerned

“Extra provisions is to strengthen the balance sheet. We don’t expect a decline in NIM to impact return on assets. The second half of the year is the best for rural business,” Ramesh Iyer, MD and VC, Mahindra Finance, had told CNBC-TV18.

Following the results announcement, the stock has slumped 6 percent. Brokerages, too, have revised earnings per share estimates for FY24 on the back of shrinking margins, reluctance to pass rate hikes and the fixed-rate nature of the loan book.