M&M Finance expects 200% rise in its housing book in the next three years

Mahindra & Mahindra Financial Services, commonly known as M&M Finance, is bullish on its housing loan segment and expects to see a 200 percent rise in the next three years. Ramesh Iyer, Vice Chairman and Managing Director at M&M Finance, told CNBC-TV18 that the company expects its housing loan book to hit Rs 20,000 crore in the next three years with a largely focused approach on affordable housing.

“Going forward, you would see a disbursement growth very clearly. We are currently about Rs 8,000-9,000 crore of book. There we are talking about – in three years, Rs 20,000 crore book with 50 percent coming from affordable housing,” he said.

M&M Finance's positive outlook for the housing loan segment is in line with the government's focus on affordable housing. The government has been taking several initiatives to promote affordable housing, such as the Pradhan Mantri Awas Yojana and the Credit Linked Subsidy Scheme. These initiatives are expected to boost the demand for affordable housing, and M&M Finance is well-positioned to capitalize on this trend.

The company has been performing well, and sentiments are positive. Despite the pandemic, rural cash flow is not just farm-dependent, and M&M Finance has been reaping the benefits of this trend.

“The sentiments are pretty positive even now and the numbers look pretty good for us. This has not been just one quarter, we have seen it over the last few quarters that the numbers are good and the demand is definitely coming in from all products, all geographies,” he said.

The company has also been working on changing its product mix to protect its net interest margin (NIM).

While M&M Finance has been performing well, the housing finance business has been struggling with asset quality issues. However, Iyer believes that it will take only 2-3 quarters for the improvement in the asset quality of the housing finance business. The company's focus on affordable housing will aid in achieving this target.

The yields have been helping M&M Finance improve its NIM, and the company is not concerned about its NIM. Iyer believes that the product mix change will aid in the protection of NIM, which will further help the company maintain its growth momentum.

“We don’t see that NIMs should be something of a concern,” he said.

The stock has gained over 2 percent in the last week and has declined around 2 percent over the past month.