Stable Market Share in Passenger Vehicles and Tractors
FinTech BizNews Service
Mumbai, October 22, 2024: The Board of Directors of Mahindra & Mahindra Financial Services Limited (Mahindra Finance), a leading provider of financial services in Emerging India, at its meeting held today, announced the unaudited financial results for the quarter ended September 30, 2024 (Q2FY25).
Standalone:
Key Points: Q2 FY25 PAT grows 57% YoY to Rs 369 crores v/s Rs 235 crores
· AUM (Business assets): Rs 1,12,454 crores v/s Rs 93,723 crores, YoYá 20%
· Disbursement: Rs 13,162 crores v/s Rs 13,315 crores, YoYâ 1%; YoY á 2% for H1 FY25
· Total Income: Rs 3,925 crores v/s Rs 3,240 crores, YoY á 21%; PPOP: YoYá 27%
· Stable Market Share in Passenger Vehicles and Tractors.
· Asset quality: GS2+GS3 @ 10.3%. Stage-3 @3.8%. Credit Cost:2.3% v/s 2.4% (Q2FY24)
· Capital Adequacy healthy at 16.7% - Tier-1 Capital @ 14.8%. Provision coverage on Stage 3 loans prudent at 59.5%. Total liquidity buffer comfortable at Rs 8,912 crores
FY 2025 Q2 Standalone Results:
Q2FY25 Results (Rs. Crores) | Q2 FY25 | Q2 FY24 | YoY % | Q1 FY25 | QoQ % | H1 FY25 | H1 FY24 | YoY % | |
Total Income (TI) | 3,925 | 3,240 | 21% | 3,760 | 4% | 7,685 | 6,366 | 21% | |
Net Interest Income (NII) | 1,991 | 1,674 | 19% | 1,932 | 3% | 3,922 | 3,349 | 17% | |
NII Margin (as % of Avg. Total Assets) | 6.5% | 6.5% |
| 6.6% |
| 6.5% | 6.6% |
| |
Pre-Provisioning Operating Profit (PPOP) | 1,196 | 943 | 27% | 1135 | 5% | 2,331 | 1,943 | 20% | |
Credit Costs | 703 | 627 | 12% | 448 | 57% | 1,152 | 1153 | 0% | |
Credit Costs (as % of Avg. Total Assets) | 2.3% | 2.4% |
| 1.5% |
| 1.9% | 2.3% |
| |
Profit After Tax | 369 | 235 | 57% | 513 | -28% | 882 | 588 | 50% | |
ROA (as % of Avg. Total Assets) | 1.2% | 0.9% |
| 1.8% |
| 1.5% | 1.2% |
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Disbursements | 13,162 | 13,315 | -1% | 12,741 | 3% | 25,903 | 25,480 | 2% | |
Gross Loan Book (YTD) | 1,12,454 | 93,723 | 20% | 1,06,339 | 6% |
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Operations:
As of September 30, 2024 (Q2FY25), Business Assets stand at Rs 1,12,454 crores, reflecting a 20% YoY growth. As growth in various Wheels segments viz. passenger vehicles, commercial vehicles etc. slowed down, the disbursements for the first half of FY25 were Rs 25,903 crores, a relatively muted growth of 2% YoY. Disbursements for Q2FY25 were Rs 13,162 crore.
The collection efficiency remained stable at 96%, consistent with the same quarter of the previous year. The Company continued its focus on enhancing underwriting standards and addressing early-stage delinquencies. Stage-3 assets were at 3.8%, an improvement over 4.3% a year ago. Sequentially, there has been some uptick (June end stage-3 assets at 3.6%). About 40% of this increase was contributed by Tractor segment. With Kharif cashflows, the Company expects normalization in Q3 FY25. Stage-2 and Stage-3 assets put together were at 10.3%.
CORE
Wheels Business:
During the quarter, the Disbursements for the Wheels business was muted. This was on the back of a muted performance of the vehicle industry. The Business Assets continued expected growth of 20% over September 2023 and 6% over June 2024. The Industry Market Shares for Passenger vehicles and Tractors were stable.
Mahindra Finance is among the top five NBFCs for financing three-wheelers (3W), passenger vehicles (PVs), commercial vehicles (CVs), light commercial vehicles (LCVs), and small commercial vehicles (SCVs). It continues to lead in the tractor-financing segment. The company is also gaining momentum in the pre-owned vehicle business as part of its strategy to diversify its asset mix within the Wheels business. The share of this segment in overall disbursements during Q2 FY25 stood at 18%. The Company expects this share to move up to 20% over the next 2-3 quarters.
The Centralized Processing Centre (CPC) went live at an all-India level at the start of the quarter. This will bring in efficiency, standardization and improved controls. The new retail branch structure also went live all-India during the quarter. The Company plans to leverage this set up for cross-sell opportunities and improved customer service.
On the Tech front, the Company continues to hone its digital engine for cross-sell and improved underwriting. An integrated app for the collection staff went live all-India during the quarter. The core tech enabled onboarding stack is making steady progress and the Company expects national roll out in H2 FY25.
NEW ENGINES
SME:
The company recognizes the growth potential within the MSME sector in India, with specific focus on the micro segment. During the quarter, this segment delivered a Disbursement growth of 52% YoY (H1FY25 YoY growth: 59%). Consequently, the Asset Book expanded by 11% on a YoY basis and was at Rs 5,164 crores as of September 30, 2024. Its loan against property (LAP) business now accounts for 38% of the overall SME assets.
The Company is strategically partnering with key industry stakeholders and digital MSME aggregators. The company has also entered into a co-origination partnership with UGRO Capital to offer affordable, property-backed loans.
Additionally, the company has partnered with Salesforce India to develop a Loan Origination Software (LOS) specifically designed for Micro, Small, and Medium Enterprises (MSMEs), aimed at improving operational efficiency and customer satisfaction in that segment. This development went live at an all-India level during the quarter.
This business continues to hold a high bar on asset quality with Stage-3 Assets at 1.2% as at September end.
Leasing:
The Disbursement for the Leasing Portfolio grew 43% YoY in Q2FY25 & 29% YoY in H1FY25. The Company now has a strong base of 500 corporate clients. The business is also making investments to grow omnichannel B2C subscription business and expects traction over medium term.
Insurance:
Post obtaining the composite agency license from IRDAI, the company has partnered with six insurance companies – Care, Chola, Kotak Life, Max Life, Niva Bupa and TATA AIG. The company plans to further partner with various InsureTechs to further broaden its product portfolio and enhance customer experience. The objective is to offer comprehensive insurance solutions specifically addressing the evolving financial requirements of the customers. The employees are being trained to ensure responsible insurance cover selling.
Mortgage
The growth opportunity in mortgage is large. During the quarter, the Company obtained an approval from its Board to enter this business. Jaspreet Chadha, a seasoned leader in mortgage space joined the Company in September to lead this segment. Prior to this assignment he was leading various businesses at Bajaj Finance, including a leadership position at Bajaj Housing.
Partnerships:
The co-lending and co-origination partnerships with SBI, BOB and MSME marketplaces are making steady progress. During the quarter, the Company received RBI approval for co-branded credit cards, and it is at an advanced stage of finalizing a banking partner. A strategic tie up with IDFC Bank has been inked for Fastag. To nurture all these partnerships, the Company has on-boarded Bijoy Thaplial, an experienced professional to lead Leasing, Partnerships, Payments and the Fixed Deposit business.
Fixed Deposits (FD’s):
Mahindra Finance is one of the few deposits taking NBFCs and the company’s FDs are an attractive investment avenue, with a AAA rating from both CRISIL and India Ratings, reflecting the highest safety standards. As of September 30, 2024, FDs as a percentage of total borrowings were at 8.6%. In October 2024, the Company commenced mobilizing fixed deposits using the branch network of Muthoot Finance.
CSR
The Company focuses on financial literacy, women empowerment, girl child education and environmental protection as its key themes under CSR initiatives. Its dedicated team works with multiple implementation agencies and ensure efficient and productive utilization of funds that it contributes. Mahindra Finance’s "Swabhiman" initiative, a three-month e-auto rickshaw driving training program for women from economically disadvantaged backgrounds, has been recognized with the CSR Project of the Year Award 2023-24 at the India CSR Summit & Awards, as well as the Best CSR Initiative and Best Financial Inclusion Initiative at the prestigious DNA Awards 2024.
Mahindra Finance remains dedicated to maintaining its brand reputation and value. The company continuously strengthens its commitment to integrity, transparency, and ethical practices by enhancing compliance, risk management, and governance measures.
Consolidated:
FY 2025 Q2 Consolidated Results
Q1FY25 Results (Rs Crores) | Q2 FY25 | Q2 FY24 | YoY % |
Total Income (TI) | 4,479 | 3863 | 16% |
Profit After Tax | 390 | 287 | 36% |
Disbursements | 13,873 | 13,881 | -0.1% |
Subsidiaries:
Key Points:
· Mahindra Manulife: AUM crosses Rs 30,000 crores (in October 2024)
· Mahindra Rural Housing: Asset Quality: Gross Stage 3 maintained @ 9%
Mahindra Rural Housing Finance Limited (MRHFL)
Q2 FY25 Results (in crores) | Q2 FY25 | Q2 FY24 | YoY % |
| H1 FY25 | H1 FY24 | YoY% |
Total Income | 302 | 331 | -9% | 604 | 673 | -10% | |
Profit Before Tax | 9 | 15 | -38% | (66) | (15) | NA | |
Profit After Tax | 7 | 12 | -37% | (49) | (11) | NA | |
Loans & Advances (net) | 7,010 | 6,625 | 6% |
| 7,010 | 6,625 | 6% |
Gross Stage 3 % | 9.1% | 12.0% |
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| 9.1% | 12.0% |
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Mahindra Insurance Brokers Limited (MIBL)
Q2 FY25 Results (in crores) | Q2 FY25 | Q2 FY24 | YoY % |
| H1 FY25 | H1 FY24 | YoY% |
Total Income | 261 | 289 | -10% | 547 | 453 | 21% | |
Profit Before Tax | 19 | 38 | -51% | 49 | 62 | -21% | |
Profit After Tax | 13 | 29 | -55% | 34 | 46 | -25% | |
Gross Premium | 974 | 1025 | -5% | 1983 | 2047 | -3% |
Mahindra Manulife Investment Management Private Limited (MMIMPL)
Q2 FY25 Results (in crores) | Q2 FY25 | Q2 FY24 | YoY % |
| H1 FY25 | H1 FY24 | YoY% |
Total Income | 24 | 14 | 70% | 44 | 28 | 54% | |
Profit After Tax | -2 | -9 | NA | -7 | -14 | NA | |
Average Overall AUM | 28,150 | 12,582 | 124% | 25,376 | 11,428 | 122% | |
Average Equity AUM | 25,620 | 10,912 | 135% | 22,957 | 9,953 | 131% |
Mahindra Manulife Trustee Private Limited (MMTPL)
Q2 FY25 Results (in crores) | Q2 FY25 | Q2 FY24 | YoY % |
| H1 FY25 | H1 FY24 | YoY% |
Total Income | 0.39 | 0.27 | 44% | 0.70 | 0.50 | 40% | |
Profit After Tax | 0.22 | 0.14 | 57% | 0.33 | 0.14 | 136% |
Mahindra Ideal Finance Ltd (MIFL)
Q2 FY25 Results (in LKR Mn) | Q2 FY25 | Q2 FY24 | YoY % |
| H1 FY25 | H1 FY 24 | YoY% |
Total Income | 664 | 558 | 13% | 1256 | 1149 | 9% | |
Profit Before Tax | 80 | 58 | 38% | 91 | 106 | -16% | |
Profit After Tax | 45 | 30 | 50% | 44 | 55 | -20% | |
Loans & Advances (net) | 11072 | 6563 | 69% | 11072 | 6563 | 69% |
(LKR Exchange Rate 1 LKR = 0.2779 INR)
Joint Venture / Associate:
Mahindra Finance USA, LLC (MFUSA)
Q2 FY25 Results (in USD Mn) | Q2 FY25 | Q2 FY24 | YoY % |
| H1 FY25 | H1 FY24 | YoY% |
Total Income | 22 | 21 | 5% | 43 | 40 |
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