Mahindra & Mahindra Financial Services Limited- Q2 Results

Introduction

Mahindra & Mahindra Financial Services Ltd. (MMFSL) is a rural non-banking financial company in India, with its headquarters in Mumbai, Maharashtra. The company is among the leading tractor financiers in the country, boasting more than 1,000 offices nationwide. MMFSL, originally named Maxi Motors Financial Services Limited, was established in January 1991. The company changed its name to Mahindra & Mahindra Financial Services Ltd. in November 1992 and registered with the RBI as an asset finance, deposit-taking NBFC.

MMFSL announced its financial results for the quarter ending September 30th on October 27th after the close of market hours. The important facts and figures are provided below.

Additional Read: Q2 Results Dashboard

Key Financial Metrics

Performance Highlights (Standalone)

• Mahindra & Mahindra Financial Services Ltd. reported a 47.5% YoY decline in net profit at ₹235.18 Cr during Q2 FY 2023-24.
• The company’s standalone revenue from operations rose 24.2% YoY at ₹3,211.94 Cr during the second quarter, compared to ₹2,585.84 Cr in the corresponding quarter last year.
• The net interest income (NII) increased by 8.5% YoY at ₹1,645.4 Cr compared to ₹1,517 Cr during Q2 FY 2022-23.
• The company’s net interest margin (NIM) for the period under review stood at 6.5%.
• Disbursements in the same period rose 13% YoY at ₹13,315 Cr from ₹11,824 Cr during Q2 FY 2022-23.
• Sequentially, the loan book grew by 8.1% to ₹93,723 Cr.

As per an exchange filing, Mahindra & Mahindra Financial Services Ltd. reported that its standalone PAT declined almost 48% YoY, falling to ₹235.18 Cr from ₹448 Cr. This was far lower than the analysts’ estimates, which initially pegged the company’s net profit at ₹483.1 Cr.

The company’s bottom line was affected by a 14% increase in total provisions earmarked for stage 1, stage 2, and stage 3 assets during the period under review. The total provisions as on September 30, 2023, stood at ₹3,775 Cr compared to ₹3,295 Cr the previous year.

MMFSL’s total income (standalone) during the second quarter of the fiscal year grew by 24.2% YoY to ₹3,240.5 Cr. Meanwhile, the company’s loan book (AUM) increased by 27% YoY to ₹93,723 Cr. Sequentially, it rose 8.1% QoQ.

The Gross Stage 3 level stood at 4.3%, while the Gross Stage 2 improved from 6.4% to 5.7% during the period under review.

The credit cost for Q2 FY 2023-24 was at ₹627 Cr (2.4% of the avg. assets) as against ₹198 Cr (1%) in the same period last year. Additionally, the net write-offs declined at ₹351 Cr versus ₹543 Cr in the corresponding period last year.

Management Commentary

Major Announcements

• The management disclosed their plans to open new branches over the next six months.
• The company’s board approved the limit increase of raising funds through the issue of non-convertible debentures and subordinated debt.
• The board approved the limit increase for the issuance of commercial papers from the current outstanding limit of ₹10,000 Cr to ₹15,000 Cr.

Mahindra & Mahindra Financial Services Limited: H1 Consolidated Financial Figures (YoY)

Particulars	H1 FY 2022-23	H1 FY 2023-24
Revenue from Operations	₹5,913.07 Cr	₹7,416.45 Cr
Total Income	₹5,943.23 Cr	₹7,500.38 Cr
Total Expenses	₹4,924.39 Cr	₹6,662.23 Cr
Profit Before Tax	₹986.33 Cr	₹866.07 Cr
Profit for the Period	₹731.90 Cr	₹649.46 Cr
Total Comprehensive Income	₹656.67 Cr	₹678.12 Cr

Also Read: Mahindra Group

Mahindra & Mahindra Financial Services Limited: Consolidated Financial Figures (QoQ)

Particulars	Q1 FY 2023-24	Q2 FY 2023-24
Revenue from Operations	₹3,583.20 Cr	₹3,833.25 Cr
Total Income	₹3,636.91 Cr	₹3,863.47 Cr
Total Expenses	₹3,167.88 Cr	₹3,494.35 Cr
Profit Before Tax	₹482.80 Cr	₹383.27 Cr
Profit for the Period	₹362.22 Cr	₹287.24 Cr
Total Comprehensive Income	₹382.98 Cr	₹295.14 Cr

Mahindra & Mahindra Financial Services Limited: H1 Standalone Financial Figures (YoY)

Particulars	H1 FY 2022-23	H1 FY 2023-24
Revenue from Operations	₹5,072.15 Cr	₹6,296.50 Cr
Total Income	₹5,107.87 Cr	₹6,365.90 Cr
Total Expenses	₹4,142.16 Cr	₹5,576.08 Cr
Profit Before Tax	₹911.20 Cr	₹789.82 Cr
Profit for the Period	₹671.25 Cr	₹587.84 Cr
Total Comprehensive Income	₹559.86 Cr	₹606.83 Cr

Mahindra & Mahindra Financial Services Limited: Standalone Financial Figures (QoQ)

Particulars	Q1 FY 2023-24	Q2 FY 2023-24
Revenue from Operations	₹3,084.56 Cr	₹3,211.94 Cr
Total Income	₹3,125.41 Cr	₹3,240.49 Cr
Total Expenses	₹2,651.87 Cr	₹2,924.21 Cr
Profit Before Tax	₹473.54 Cr	₹316.28 Cr
Profit for the Period	₹352.66 Cr	₹235.18 Cr
Total Comprehensive Income	₹369.91 Cr	₹236.93 Cr

Also Read: Mahindra & Mahindra Ltd.

Mahindra & Mahindra Financial Services Limited: Standalone Balance Sheet

Particulars	As of September 30, 2023
Financial Assets	₹1,02,833.48 Cr
Non-financial Assets	₹2,624.27 Cr
Total Assets	₹1,05,457.75 Cr
Financial Liabilities	₹88,124.86 Cr
Non-financial Liabilities	₹376.74 Cr
Total Equity	₹16,956.15 Cr
Total – Equity and Liabilities	₹1,05,457.75 Cr

Stock Performance

Mahindra & Mahindra Financial Services Ltd. disclosed their financial results for the quarter under review on October 27th after the closing of market hours. On Friday, the company’s shares opened at ₹272.90, rose 3.24%, and closed at ₹278.50 apiece on BSE.

About the Company

Mahindra & Mahindra Financial Services Ltd. is the country’s leading financial services provider, focusing primarily on underserved customers in the rural and semi-urban markets. The company boasts an extensive network, with nearly 1,400 offices spread throughout the country, serving more than 9 million customers. MMFSL’s suite of financial products includes SME Finance, personal loans, fixed deposits, and mutual fund schemes, among others. It is also the only non-banking Indian financial company listed on the Dow Jones Sustainability Index for Emerging Markets.

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Sources:

https://www.mahindrafinance.com/wp-content/uploads/2023/10/MMFSL-UNAUDITED-FIN-RESULTS-SEBI-LODR-Reg-33-SEPT2023-v4-FINAL.pdf

https://www.mahindrafinance.com/wp-content/uploads/2023/10/Earnings-Presentation-signed.pdf