Mahindra Finance, a prominent player in the financial sector, recently unveiled its fourth-quarter financial results, showcasing a mixed performance characterized by both growth and challenges. The company reported a net profit decline of 9.5% year-over-year (YoY) for the fourth quarter, alongside announcing a dividend of ₹6.30 per share. Despite the profit setback, Mahindra Finance displayed promising signs of improvement in certain key areas, reflecting resilience amid a challenging economic landscape.
Steady Total Income Growth and Profit After Tax Downturn
For the quarter ending March 31, 2024, Mahindra Finance reported a total income of ₹3,706 crores, marking a commendable 21% increase YoY. However, the Profit After Tax (PAT) experienced a slight downturn by 10% YoY, settling at ₹619 crores. This decline in PAT, despite robust total income growth, was attributed to various factors, including increased Net Interest Income (NII) and stable Net Interest Margin (NIM) figures.
Positive Indicators Amid Profit Downturn
The company’s financial performance showcased a mix of positive and challenging indicators. Despite the decline in PAT, Mahindra Finance witnessed a notable 14% increase in Net Interest Income (NII), reaching ₹1,971 crores. The Net Interest Margin (NIM) remained fairly stable at 7.1%, indicating sound operational efficiency and effective interest rate management. Additionally, the reported disbursements for the quarter saw an 11% rise, totaling ₹15,292 crores, showcasing continued business momentum.
Improvement in Asset Quality and Credit Costs Management
One of the highlights of Mahindra Finance’s performance was the marked improvement in asset quality, with a significant reduction in Stage 3 assets to 3.4%, down from 4.0% in December 2023. This improvement underscores the company’s commitment to maintaining sound credit quality and effective risk management strategies. Furthermore, credit costs for the year were kept within the targeted range of 1.5% – 1.7%, reflecting prudent risk assessment and mitigation measures.
Consolidated Results and Strategic Initiatives
In its consolidated results, Mahindra Finance posted a total income of ₹4,333 crores for the fourth quarter, representing a notable 23% YoY increase. Despite the overall growth in total income, the company witnessed a marginal decrease in PAT by 1%, amounting to ₹671 crores. The consolidated disbursements also noted an 11% YoY increase, reaching ₹16,174 crores, indicating sustained business expansion efforts.
In terms of strategic initiatives, Mahindra Finance outlined plans to strengthen its presence in vehicle finance, particularly in the pre-owned vehicle finance segment, which grew by 18% during FY24. Additionally, the company aims to enhance its services in the non-vehicle finance segment, with a target of expanding its Asset Under Management (AUM) by 15% over the medium term. This includes increasing investments in sectors such as Small and Medium Enterprises (SME) lending, Lease and Purchase (LAP), and leasing through its Quiklyz platform.
In conclusion, Mahindra Finance’s Q4 results reflect a mixed performance marked by growth in total income, challenges in PAT, and positive indicators in asset quality and credit costs management. The company’s strategic initiatives underscore its commitment to driving sustainable growth and expanding its market presence across various financial segments.
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