Shares of Mahindra & Mahindra Financial Services Ltd dropped 2% to ₹266.65 on January 29 following the company’s Q3 FY25 results, despite reporting a 62.7% surge in net profit.
Key Financial Highlights (Q3 FY25 vs. Q3 FY24)
- Net Profit: ₹899.5 crore, up 62.7% YoY, exceeding CNBC-TV18’s estimate of ₹587 crore.
- Net Interest Income (NII): ₹2,097.1 crore, up 18% YoY, surpassing the expected ₹1,927.2 crore.
- Impairment on financial instruments: Down 97% YoY to ₹9.14 crore.
- Disbursements: ₹16,467 crore, up 7% YoY.
- Assets Under Management (AUM): ₹1.15 lakh crore, reflecting a 19% YoY increase.
- Total Income: ₹4,144 crore, up 20% YoY.
- Stage 3 Assets: Rose to 3.9%, indicating some asset quality strain.
Key Business Updates & Market Reaction
- Collection efficiency remained stable at 95% sequentially.
- Provisions for expected credit loss stood at ₹3,496 crore as of December 2024, slightly up from ₹3,401 crore in March 2024.
- The company recalibrated its credit loss model for the SME and trade advance portfolio.
- Maintained a strong liquidity position with ₹9,322 crore in cash reserves.
Despite the strong financials, investor concerns over rising asset quality stress (Stage 3 assets at 3.9%) and slowdown in loan growth seem to have led to the stock decline.
As a leading NBFC, M&M Financial continues to adhere to RBI guidelines while managing impairment reserves to account for future risks.
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