Mahindra & Mahindra Financial Services Limited (MMFSL) has announced a rights issue worth Rs 3,000 crore to strengthen its Tier 1 capital and support its future growth plans. The decision was approved by the company’s board in a meeting held on February 13, 2025.
The company stated that the funds raised through the rights issue would be utilized to maintain a strong capital adequacy ratio, keeping in mind its expansion strategy and increasing assets under management (AUM). The specifics of the rights issue, including the issue price, entitlement ratio, record date, and other details, will be determined and announced in due course.
Key Highlights:
- Growth in secured asset portfolio: MMFSL reported a 21% CAGR in its secured asset AUM over the last 21 months.
- Asset quality maintained: Gross Stage 3 (GS3) remains below 4%, while credit costs stayed under 2%.
- Capital infusion: The rights issue is expected to boost the company’s Tier 1 capital by over 200 basis points.
- Strategic expansion: MMFSL sees strong growth potential in India’s domestic consumption sector and aims to leverage its position as a top-rated NBFC financier in rural and semi-urban India.
MMFSL, a key player in the Mahindra Group, caters primarily to rural and semi-urban markets, providing vehicle and tractor financing, SME loans, and fixed deposits. With an AUM of over USD 13.7 billion and a customer base exceeding 10 million, the company has a vast outreach with 1,375 offices across 4,80,000 villages and 8,000 towns in India.
This fund-raising move aligns with Mahindra Finance’s strategy to expand its lending capabilities while maintaining a robust balance sheet. The market will be closely watching the impact of this rights issue on MMFSL’s financial strength and future growth trajectory.
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