Mahindra & Mahindra Financial Services (M&MFIN) Q4 05/06 earnings summary

Executive summary

• Rural and semi-urban financing growth drove FY06 income to ₹596.41cr, up 47.3%, and PAT to ₹108.27cr, up 31.6% YoY.

• Total assets increased 59% to ₹4,951.27cr; customer contracts grew 38.9% to 467,977, supported by a wider branch network and product expansion.

• FY07 outlook was optimistic, with continued rural finance opportunity balanced by expected higher interest rates and fuel costs that could slow vehicle demand.

Financial highlights

• Total income rose 47.3% to ₹596.41cr; operating income increased 46.7% to ₹582.32cr.

• PBT increased 22.1% to ₹162.15cr; PAT rose 31.6% to ₹108.27cr. Basic EPS was ₹14.59 and diluted EPS ₹14.41.

• Financial expenses climbed 64.7% to ₹219.44cr; provisions and write-offs rose 45.7% to ₹81.61cr, while total expenditure increased 59.6% to ₹434.26cr.

• Asset financing reached ₹4,477.91cr; loan assets increased 50.3% to ₹4,138.98cr from ₹2,753.76cr YoY.

Outlook and guidance

• FY07 outlook remained optimistic, based on expected continued growth in rural and semi-urban markets and retail finance demand.

• Priorities included innovative products, risk-adjusted pricing, customer convenience, broader distribution, strong processes and prudent risk management.

• Branding expansion to additional states was planned for FY07; mutual fund distribution was set to begin in six centers on a pilot basis.