Mahindra & Mahindra Finance Q1 Results: Shares jump 10% on strong profit, core income growth

Shares of Mahindra & Mahindra Financial Services Ltd. (Mahindra Finance) jumped as much as 10.5% after the NBFC reported a strong set of June-quarter earnings on Tuesday, July 21, with consolidated net profit rising 75.3% year-on-year to ₹927.5 crore from ₹529 crore a year ago.

Its net interest income (NII) rose 18% to ₹2,580 crore from ₹2,188 crore in the corresponding quarter last year. Total income increased to ₹5,724.8 crore from ₹5,013.4 crore a year ago, while profit before tax surged to ₹1,242.2 crore from ₹703.6 crore.

Interest income climbed to ₹4,952.2 crore, while impairment on financial instruments declined to ₹567.3 crore from ₹695.1 crore a year earlier, aiding profitability.

The results follow a healthy operational update released earlier this month, when the company reported that overall disbursements grew 21% year-on-year to around ₹15,560 crore during the June quarter. Business assets expanded about 12% from a year earlier to ₹1.37 lakh crore, while collection efficiency remained steady at 95%.

Gross Stage-3 assets stood at 3.45% as of June 30, improving from 3.85% a year ago, though marginally higher than 3.41% at the end of March. Net Stage-3 assets declined to 1.48% from 1.91% a year earlier, while the provision coverage ratio improved to 58.08% from 51.43%. Capital adequacy remained comfortable at 18.54%.

In its provisional business update, the lender had estimated Stage-3 assets in the 3.4%-3.5% range and Stage-2 assets at 4.9%-5.0%, broadly in line with the reported numbers. The company also ended the quarter with a liquidity chest of over ₹14,600 crore, providing a strong funding buffer.

Mahindra & Mahindra Finance said it continued to maintain management overlays on expected credit losses. As of June 30, total expected credit loss provisions stood at ₹4,227.9 crore, including management overlays, compared with ₹4,130.3 crore at the end of March.

The company added that its impairment allowances under Ind AS 109 exceeded the provisioning required under RBI's IRACP norms, and therefore no amount was required to be transferred to the impairment reserve.

Shares of the company jumped 7.75%, hitting an intraday high of ₹348.30. The stock was trading at ₹345.95 as of 3.10 pm on Tuesday, still up 7.25%. It has declined more than 17% so far this year, while surging nearly 28% over the last one year.