M&M Financial Services Q1 net profit rises 51%, but stock falls 4%: Here's why

M&M Financial Services Q1 results: Mahindra and Mahindra Financial Services Ltd recorded a standalone profit after tax (PAT) of Rs 352.66 crore for the June quarter of FY 24, which is 58.2 per cent more than what it had reported in Q1 FY23. The company had reported a net profit of Rs 222.92 crore in the year-ago period.

The net profit fell 48.5 per cent from Rs 684.12 crore in Q4 FY23 to Rs 352.66 crore in Q1 FY24. 

On Friday, Mahindra & Mahindra Financial share prices opened at Rs 313.95 apiece on BSE and closed at Rs 300.95.

The Net Interest Income (NII) was at Rs 1,675 crore, up by 7 per cent YOY, impacted by a change in portfolio mix and increased interest costs. The Net Interest Margin (NIM), meanwhile, stood at 6.8 percent for the quarter under review.

In an exchange filing, the company said its total income increased by 25 per cent to Rs 3,637 crore during the quarter ended June 30, 2023, as against Rs 2,914 crore during the corresponding quarter in FY23.

The NBFC's loan book increased sequentially by 4.8 per cent to Rs 86,732 crore with an improvement in disbursements. Disbursements at Rs 12,165 crore were higher by 28 per cent YoY.

> Gross Stage 3 came down marginally from 4.5 per cent in March to 4.3 per cent in June, aided by focused collection initiatives.

> The Company’s Capital Adequacy is healthy at 21.2 per cent. Provision coverage on Stage 3 loans maintained at 60.1 per cent.

> At the end of June, the company carried a total liquidity buffer of approximately Rs. 9,350 crore - covering 3 months’ obligations.

Standalone figures

> Revenue at Rs. 3,125 crore (25 per cent YoY growth)

> PAT at Rs. 353 crore (58 per cent YoY growth)

> Disbursement at Rs. 12,165 Crore; growth 28 per cent YoY

> Gross Stage 3 at 4.3 per cent vs 8.0 per cent in Q1FY23; Net Stage 3 at 1.8 per cent vs 3.5 per cent in Q1FY23.

During the first quarter of FY24, the company said it maintained its leadership position in tractor and Mahindra auto vehicle segments. The disbursement growth was broad-based across vehicle segments.

“During the first quarter of FY24, the Company maintained its leadership position in Tractor and Mahindra Auto vehicle segments. The disbursement growth was broad-based across vehicle segments," said the company.

"Going forward, the company shall focus on maintaining the market leadership in core segments, while accelerating growth in pre-owned vehicle segment, SME, Leasing and personal loans," said the non-banking financial company in the exchange filing.

Mahindra & Mahindra Financial Services Limited (Mahindra Finance), part of the Mahindra  Group, is one of India’s leading non-banking finance companies. Focused on the rural and semiurban sector, the company has over 9.3 million customers and has an AUM of over $11 billion.

The company is a leading vehicle and tractor financier, provides loans to SMEs, and also offers fixed deposits. The company has 1,367 offices and reaches out to customers spread over 3,80,000 villages and 7,000 towns across the country.