Mahindra & Mahindra Financial Services (M&MFIN) Q4 06/07 earnings summary

Executive summary

• FY07 income rose 41.6% to Rs.844.6 crore; PBT grew 25% to Rs.202.7 crore and PAT 22.7% to Rs.132.9 crore.

• Growth reflected 22% higher disbursements, deeper rural reach and product expansion; operating costs and provisions rose faster than income, moderating profit growth.

Financial highlights

• Operating income Rs.829.1 crore, up 42.4% YoY; total income Rs.844.6 crore, up 41.6%; PAT Rs.132.9 crore, up 22.7%.

• Finance costs increased 47.7% to Rs.324.1 crore; employee costs rose 59.8% to Rs.64.7 crore; provisions and write-offs reached Rs.122.3 crore, up 49.8%.

• Basic EPS was Rs.15.81 vs Rs.14.59; diluted EPS was Rs.15.37 vs Rs.14.41.

• Disbursements grew 22% to Rs.5,441 crore; new contracts were 173,110 vs 131,158, and total assets rose 25.1% to Rs.6,281 crore.

Outlook and guidance

• FY08 plans include continued aggressive branch and sales-force expansion, deeper rural penetration, and financing for commercial vehicles and construction equipment; personal loans were also planned.

• Product expansion includes rural housing finance through a newly incorporated subsidiary, subject to a planned National Housing Bank licence application.

• Management expected automobile-market growth above 15% over the next 4–5 years and described the FY08 outlook as optimistic.