Mahindra Finance rises after stellar Q4 performance

4 May 2022 , 12:45 PM

The company attributed the jump in the profitability to a reduction in GS-3, which led to significant credit cost reversal.

Total income declined 6.5% to Rs 2,466.36 crore in Q4 FY22 from Rs 2,637.51 crore in Q4 FY21.

The NBFC said that the decline was primarily due to provision for excess interest refund amounting to Rs 142 crore in compliance with RBI directions. The company continues to maintain a healthy margin on existing book.

Net interest income (NII) for the quarter was at Rs 1,531 crore, a decline of 1% YoY. Net interest margin remained stable at 7.6% during the year.

Disbursements grew 54% YoY to Rs 9,202 crore in the fourth quarter from Rs 5,970 crore reported in the same quarter last year. Collection efficiency during the quarter stood at 100%, with March clocking 109%.

Gross Stage 3 (GS-3) declined to 7.66% as on 31 March 2022 against 11.3% as on 31 December 2021 and 8.96% as on 31 March 2021. The improvement in GS-3 released Rs. 951 crore from the Stage 3 provisions.

The business environment has returned to normalcy and disbursement trends indicate rural demand and volumes being back to pre-Covid levels,? Mahindra Finance said in a statement.

The companys capital adequacy stood at a healthy 27.8%. Provision coverage on stage-3 loans strengthened to 58.1% from 53.2% at the end of previous quarter.

At the year end, the company carried a total liquidity buffer of approximately Rs 9,000 crore.

For the full year ended on 31 March 2022, standalone total income stood at Rs 9,719 crore (down 8% YoY) while net profit was at Rs 989 crore (up 195% YoY).

The board of Mahindra Finance has recommended a dividend of Rs 3.60 per share.

Announcing the business update for April 2022, Mahindra Finance said that it estimates the total disbursement of approximately Rs 2,750 crore, delivering approximately 109% growth over April 2021, primarily due to a much lower base last year, which was impacted severely by the second wave of Covid-19.

The collection efficiency (CE) was at 90% for April 2022, which is a significant improvement over April 2021 CE which stood at 72% and is higher than historical average for the month of April.

Mahindra & Mahindra Financial Services (Mahindra Finance), part of the Mahindra Group, is one of Indias leading non-banking finance companies. Focused on the rural and semi-urban sector, the company has over 7.9 million customers and has an AUM of over $11 billion. The company is a leading vehicle and tractor financier, provides loans to SMEs and also offers fixed deposits.

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