Mahindra & Mahindra Financial Services optimistic about growth despite profit dip
Mahindra & Mahindra Financial Services on January 30 posted a decline of 12% in net profit at ₹553 crore for the October-December quarter of FY24 from the year-ago quarter's ₹629 crore.
Mahindra & Mahindra Financial Services, the financial services arm of Mahindra Group, despite posting a 12% decline in net profit for the October-December quarter of FY24, remains optimistic about its growth prospects.
Sharing key insights into the company's performance, Ramesh Iyer, Vice Chairman & Managing Director of Mahindra & Mahindra Financial Services, said on Wednesday (January 31) that the company is committed to improving margins through strategic initiatives.
While talking to CNBC-TV18, Iyer highlighted the impact of Reserve Bank of India (RBI) norms on gross non-performing assets (NPA), suggesting that without the norms, the gross NPA would have been 1% higher than reported.
He emphasised that the company's provisions under the Income Recognition and Asset Classification (IRAC) norms are currently lower than the Ind AS provision.
Regarding the cost of borrowing, Iyer expressed hope for a decline in FY25.
Despite a 20 basis point increase in the current quarter, he mentioned that the company is managing well through a mix of funds and leveraging various borrowing products available for non-banking financial companies (NBFCs).
Iyer discussed the company's revised targets, stating a goal to achieve a Net Interest Margin (NIM) of 7% by March, compared to the earlier guidance of 7.5%.
He attributed this adjustment to the current elevated borrowing costs.
Iyer expressed confidence in achieving the target once borrowing costs decrease, and he highlighted the company's commitment to improving margins through strategic initiatives.
Addressing growth strategies, the company's Vice Chairman identified key areas contributing to Mahindra & Mahindra Financial Services' expansion.
The company sees significant traction in the pre-owned vehicle segment, citing strong demand and market share gains. Iyer emphasised the growth potential in this segment, especially amid challenges faced by the new car market.
Iyer conveyed that sentiments continue to be strong, and the company is holding onto its FY25 Assets Under Management (AUM) guidance of 20-25%.
He highlighted the overall collection efficiency remaining above 95% in the current year and the consistent reduction in gross Stage 3 numbers every quarter.
(Edited by : C H Unnikrishnan)
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