Mahindra and Mahindra Financial Services reported a 75% increase in consolidated net profit to ₹927 crore for the June quarter of FY27, driven by higher net interest margins and reduced provisions. The standalone profit rose 70% to ₹899 crore compared to the same period last year, the company announced on July 21.
Key Details
The increase in net interest margins (NIMs) to 7.3% from 6.7% was attributed to improved funding costs, according to CEO Raul Rebello. He noted that the company had previously conducted a rights issuance, which positively impacted its cost of funding. However, he cautioned that NIMs may face some compression in the future but expressed confidence in maintaining them above 7% in the medium term.
Overall disbursements grew by 22% during the quarter, and the company is on track with its five-year plan to expand assets to ₹3 lakh crore by FY31. The non-wheels segment, including mortgage and small business financing, is growing faster and now constitutes 17% of the portfolio. The share of overdue assets increased slightly to 3.45%, up 0.04% since March, as the company remains cautious about certain segments affected by geopolitical risks.
Background
Mahindra Group CEO Anish Shah, addressing the company's AGM, emphasized the importance of financial inclusion and digital transformation in driving long-term growth. He highlighted a 12% rise in assets under management to ₹1.34 lakh crore and a 27% increase in consolidated profit, reinforcing the company's commitment to responsible growth and governance. The company's focus on expanding its product offerings beyond vehicle finance aims to deepen customer relationships and enhance its financial services portfolio.
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The strong profit growth and improved margins are likely to bolster investor confidence in Mahindra Finance, potentially impacting its stock performance positively. Investors will watch for further developments in the company’s asset growth strategy and any adjustments to its risk management practices in response to market conditions.