Mahindra Finance’s Q2 PAT nearly falls by half to Rs 448 crore, in line with estimates

In Q2FY23, net interest income increased by 2% year over year to $1,540 crore, while total income increased by 3% year over year to $2,609 crore. At a robust 7.5%, net interest margin (NIM) performed well.

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Compared to a profit of ₹1,022.90 crore in the same quarter last year, Mahindra & Mahindra Financial Services Limited (Mahindra Finance) had a 56.17% decline in standalone net profit to ₹448.33 crore for the quarter ending September 30, 2022 (Q2FY23). Sequentially, from ₹222.92 crore in Q1 of FY23, Q2 PAT increased by 101.11%. The profitability in Q2FY23 largely met expectations.

The second quarter of the prior year saw a large reversal of impairment provisions, according to Mahindra Finance’s audit report, as a consequence of an improvement in asset quality that had worsened during Q1 FY22 due to the second wave of Covid-19. PAT for the second quarter of FY22 was 1,023 crore as a consequence.

Mahindra Finance had a total liquidity buffer as of September 30, 2022, of about Rs. 10,600 crore, or about 3.5 months’ worth of liabilities.

In Q2FY23, net interest income increased by 2% year over year to Rs.1,540 crore, while total income increased by 3% year over year to Rs.2,609 crore. At a robust 7.5%, net interest margin (NIM) performed well.

Additionally, a rise in disbursements helped the company’s loan book in Q2FY23 rise by 9% to Rs.73,817 crore from Q1FY23. Disbursement for the quarter increased 83% year over year to Rs.11,824 crore.

Further, Mahindra Finance reported that concentrated collection efforts, prompt settlements, and macroeconomic tailwinds helped to significantly improve Gross stage 3 from 8.0% last quarter (Q1 FY23) to 6.7% this quarter.

Mahindra Finance said, “We continue to maintain leadership position in financing of Tractor and Mahindra Auto segment. With evolving segment and customer mix, we expect to maintain quality growth. We are witnessing strong demand in the Tractor segment, aided by above average monsoon conditions and continued spending by government on rural projects. Increasing penetration in the used vehicles financing continues to be our focus area to help improve margins.”

Also, it added, “the company continues to invest in digitization, partnerships, and transformation projects.”

Based on an assessment of the developing economic crisis and its impact on currency devaluation, Mahindra Finance made a provision, regarded as an exceptional item, of Rs. 55 crore towards impairment of investment in its Sri Lankan subsidiary, Mahindra Ideal Finance Limited, during the quarter and half year that ended September 30, 2022.

Mahindra Finance shares ended the day at 193.60 on the BSE, up 2.32%. The market value of the business is about Rs.23,919.86 billion.