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

Executive summary

• Q1 FY25 saw standalone PAT grow 45% year-over-year to INR 513 crore (₹512.96 crore), with consolidated PAT up 37% to ₹497.01 crore, driven by 23% AUM growth and 20% income growth year-over-year.

• 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%.

• Corporate agency license received, with six insurance tie-ups live, expected to boost fee-based income and broaden product portfolio.

• Capital adequacy remains strong at 18.5% with Tier 1 at 16.4%.

Financial highlights

• Standalone PAT rose to INR 513 crore (₹512.96 crore), up 45% year-over-year; consolidated PAT was ₹497.01 crore, up 37%.

• AUM increased 23% year-over-year to Rs 1,06,339 crore; income grew 20% to Rs 3,760 crore.

• Disbursements reached INR 12,741 crore, up 5% year-over-year.

• NIMs declined sequentially and year-over-year due to elevated cost of funds; cost-to-income ratio improved to 35.8%.

• OPEX reduced both year-over-year and quarter-over-quarter, reflecting efficiency gains.

Outlook and guidance

• Management targets RoA above 2.5% and Gross Stage 3 below 4.5% across cycles, with a focus on stable asset quality and digital transformation.

• Aspires to achieve 2.2% post-tax ROA for FY25, with a longer-term goal of 2.5%.

• NIM expansion targeted through fee-based income and improved yields, aiming for a 7% margin corridor in the medium term.

• OPEX to assets ratio targeted at 2.65% for FY25, with further improvement expected.

• Credit cost expected to moderate to 1.4% in FY25, with a long-term aspiration of 1.2%-1.3%.