Mahindra Finance’s shares went down by 0.77 per cent after the company reported a 51 per cent increase in profit for the quarter ended June 30, 2023, at Rs 362.22 crore, compared to Rs 239.86 crore during the corresponding quarter last year. Revenues were up 23 per cent at Rs 3,583.20 crore, compared to Rs 2,902.14 crore last year. Sequentially, profits were lower by 82 per cent, compared to Rs 2,071.20 crore in the previous quarter.
Sonal Gandhi, research analyst at Centrum Broking, said, “Mahindra Finance has gained market share in core segments, while accelerating growth in pre-owned vehicles. Interest yields were down due to the run-off of high-yield products. Prime customers contributed 10–12 per cent of overall AUM. The company has taken price hikes on select products and is focusing on pre-owned vehicles to improve interest yields from hereon. CoF may increase as maturing debt gets repriced; it is 2-3 quarters away from witnessing any decline in CoF. Asset quality will continue to improve, and credit costs on a full-year basis will range between 1.5 per cent and 1.7 per cent.”
The report by Centrum Broking also mentioned strong growth in the auto/UV, pre-owned, and car segments. Mahindra Finance has shown strong traction in key segments, with AUM in Auto/UV, pre-owned, and cars witnessing substantial YoY growth of 32 per cent, 40 per cent, and 28 per cent, respectively. Tractor AUM also grew by 11 per cent YoY, while CV/CE registered a growth of 17.4 per cent. Disbursements in Auto/UV, cars, and pre-owned vehicles surged by over 30 per cent YoY, reflecting strong demand in these segments. However, there was a decline of 20 per cent YoY in disbursements for MSME and other segments.
Despite the positive growth, Mahindra Finance faced challenges in its Net Interest Margins (NIMs), which declined by 86 basis points YoY to 14.9 per cent, impacted by lower yields and increased CoF (cost of funds). Nevertheless, the company’s Opex improved, decreasing by 13.3 per cent QoQ to 2.8 per cent of assets. It is worth noting that Opex may rise in the future as the company continues to invest in Project Udaan.
The shares went down by 0.77 per cent to Rs 295 at 2:22 p.m. on BSE.