Mahindra & Mahindra Financial Services (M&MFIN) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 saw PAT growth of 45% year-over-year to INR 513 crore, with AUM up 23% and total income rising 20% year-over-year to INR 3,760 crore, driven by robust loan growth and stable collections.

• Disbursement growth was moderate at 5% year-over-year, impacted by election disruptions, heat waves, and flooding in key geographies.

• Asset quality remained stable, with Gross Stage 3 at 3.56% and collection efficiency at 94%.

• The company remains well-capitalized with a capital adequacy ratio of 18.5% and Tier 1 at 16.4%.

• Received IRDAI registration as a Corporate Agent (Composite), enabling six insurance tie-ups to boost fee-based income.

Financial highlights

• Standalone PAT grew 45% year-over-year to INR 513 crore; consolidated PAT was INR 497 crore, up 37% year-over-year.

• AUM increased 23% year-over-year to INR 1,06,339 crore; disbursements at INR 12,741 crore, up 5% year-over-year.

• Total income reached INR 3,760 crore, up 20% year-over-year; NII grew 15% to INR 1,932 crore.

• Cost-to-income ratio improved to 35.8% from 41.3% in Q1 FY24; OPEX reduced year-over-year and quarter-over-quarter.

• Write-offs as a percentage of average assets declined by 10 bps year-over-year.

Outlook and guidance

• Management targets RoA above 2.5% in the medium term and Gross Stage 3 below 4.5% across cycles.

• NIM target set at 7% in the medium term, with focus on augmenting income lines and fee-based income.

• OPEX to assets targeted at 2.65% for FY25, with further efficiency gains expected.

• Credit cost expected to moderate further, aiming for 1.4% in FY25 and 1.2%-1.3% longer term.

• Plans to diversify portfolio with 25-30% revenue from non-wheels segments and expand branch network by 150+ in 1-1.5 years.