Mahindra Finance slips

Mahindra & Mahindra Financial Services posted a good set of earnings for Q2FY21.

On a 5% (YoY) rise in consolidated total income at Rs.3071 crore, the company posted a net profit of Rs.353 crore, up 34%.

Interestingly, its PBT came in lower at Rs.488 crore, a decline of 4%. This was mainly on account of the higher level of impairment provisions/losses of Rs.282 crore during this quarter through management overlay to reflect deterioration in the macroeconomic outlook arising out of COVID-19 pandemic related disruptions. As of September 30,2020, the cumulative amount of management overlay provisions stood at Rs.1,484 crore.

During the period ended September 30, 2020, the Company’s customer base has crossed 69 lakh and the total value of assets financed for the half year ended September 30, 2020, was Rs.8,888 crore.

The standalone Assets Under Management (AUM) stood at Rs.81,682  crore, up 12%.

The company said that almost all the branches are up and running, except in the major metros. It is now seeing that markets are beginning to look up and the sentiments are turning positive. Businesses are returning back to normal and customer footfalls at the dealerships and its branches have substantially improved. Agri demand continues to be strong on the back of a good monsoon and harvest. It expects demand to further pick-up in the upcoming festival season.

Tractors, passenger cars and Light Commercial Vehicles (LCVs) are seeing healthy demand. Pre-owned vehicles will continue to be a growth driver. The company also expects to see an increase in digitally enabled lending and collections in rural and semi-urban markets. The company had already embarked on a digital strategy and is equipped to facilitate financing as well as repayment of installments, via the digital route.

The market does not seem too enthused with this performance. Though the stock opened 1.5% higher at Rs.132.80, it soon slipped down to Rs.126 and hovering currently around the same levels.