Mahindra & Mahindra Financial Services (M&MFIN) Q2 24/25 earnings summary

Executive summary

• Standalone and consolidated PAT rose 57% and 36% year-over-year in Q2FY25, with total income up 21% and AUM/book growth at 20% year-over-year.

• Asset quality stable with Gross Stage 3 at 3.8% (coverage ratio 59.5%), though sequential stress in tractors and LCVs due to rural cash flow issues.

• Disbursements remained flat year-over-year at ₹13,162 crore for Q2FY25; collection efficiency steady at 96%.

• NIMs stable at 6.5% for H1/Q2FY25; cost-to-income ratio improved to 40.6% in H1FY25.

• ROA at 1.5% for H1FY25, with full-year visibility in the 1.8-2% range.

Financial highlights

• Standalone Q2FY25 PAT at ₹369 crore, up 57% year-over-year; consolidated PAT at ₹390 crore, up 36%.

• Standalone total income for Q2FY25 at ₹3,925 crore, up 21% year-over-year; consolidated revenue at ₹4,465 crore.

• Cost-to-income ratio improved to 40.6% in H1FY25 from 42% in FY24.

• PPOP up 27% year-over-year; OpEx ratio improved from 2.8% to 2.6%.

• EPS (Basic) at ₹7.15 for H1FY25.

Outlook and guidance

• Credit cost for H1 at 1.9%, expected to decline to 1.3-1.5% for FY25, supported by anticipated recoveries and lower end losses.

• Book/AUM growth for FY25 projected at 18-20%, with disbursement growth flattish.

• ROA expected to reach 1.8-2% by FY25 exit; targeting Gross Stage 3 below 4.5%.

• Three-year aspiration for disbursement CAGR in the mid-teens, leveraging new businesses.

• Focus on operational efficiency, digital collections, and cost management initiatives.