Vehicle Finance

Mahindra Finance delivers impressive Q3 performance

Increasing penetration in the used vehicles financing continues to be its focus area to help improve margins while improved rural cash flows during the quarter supported demand sentiments

Ramesh Iyer, Vice Chairman & MD, Mahindra Finance

The Board of Directors of Mahindra and Mahindra Financial Services Limited (Mahindra Finance), a leading provider of financial services in the rural and semi-urban markets, at its meeting held recently, announced the unaudited financial results for the quarter and nine months ended December 31, 2022. The performance during Q3 was characterised by further improvement in asset quality coupled with healthy growth in disbursements and asset book.

The standalone figures revealed a disbursement growth of 80% YoY with sequential growth of 22%; loan book of Rs. 77,344 crore with YoY growth of 21% and sequential growth of 5%. Its gross stage 3 stood at 5.9% and net stage 3 was at 2.5%. Revenue stood at Rs. 2,892 crore with 14% YoY growth and 9MFY23 PAT was at Rs 1,300 crore with 235% YOY growth.

The standalone results of FY 2023 Q3 are as follows:

• Continued and steady improvement in asset quality – Gross Stage 3 improves to 5.9% (6.7% in Q2FY23) and Gross Stage 2 improves to 8.4% (9.7% in Q2FY23). Provision coverage on Stage 3 loans was maintained at 59%
• Loan book increased by 21% to Rs 77,344 crore compared to Q3FY22. Disbursement for the quarter at Rs 14,467 crore was up 80% on YoY basis
• Total income was at Rs 2,892 crore, up 14% YoY. Net interest margin for the quarter was at 7.4%
• Net interest income (NII) at Rs 1,650 crore was up 7% YoY
• The company reported PAT of Rs 629 crore during the quarter. The 9MFY23 PAT was at Rs 1,300 crore versus Rs 388 crore in 9MFY22, indicating growth of 235%. Third quarter of the previous year continued with significant reversal of impairment provisions as a result of improvement in asset quality which had deteriorated during Q1FY22 due to the second wave of the pandemic. This resulted in a PAT of Rs 894 crore for Q3FY22
• The company’s capital adequacy stood at a healthy 23.4%
• As of December end, the company carried a total liquidity buffer of approximately Rs 10,800 crore, covering more than three months’ obligations.

During the nine months ended December 31, 2022, the company has made a provision, considered as exceptional item, of Rs 56 crore towards impairment of assets pertaining to its subsidiary in Sri Lanka, Mahindra Ideal Finance Limited (MIFL), based on assessment of the evolving economic crisis and its effect on currency devaluation. During the corresponding period last year, the company increased its shareholding in MIFL from 38.2% to 58.2%. This stake increase had resulted in revaluation of its existing equity stake in MIFL, which led to a one-time revaluation gain of Rs 21 crore, which is shown as exceptional item in the nine months of FY22 consolidated financials.


The company’s leadership position was further strengthened in the financing of tractor, Mahindra Auto and non-Mahindra segments with improvement in market shares during the current quarter. Increasing penetration in the used vehicles financing continues to be its focus area to help improve margins. Improved rural cash flows during the quarter supported demand sentiments. The SME asset book which is over Rs 4,000 crore has grown 10% sequentially and contributes 5% of the business assets aided by disbursement towards supply chain funding. Its leasing business, Quiklyz, recently signed MOUs with five last mile mobility players.

This was done to deliver 1,000 electric three-wheelers, opening up newer opportunities in EV leasing. The YTD disbursement of Rs 35,764 crore registered a YoY growth of 95%. This led to an asset book of Rs 77,344 crore, a growth of 21% YoY and 5% sequentially. During Q3, the company was able to pass on the increase in borrowing costs, which improved yields. The Collection War Room set up by the company continued to focus on early bucket resolutions and use of legal tool kits for enhanced outcomes. Collection efficiency for the quarter stood at 95%, similar to the third quarter of the previous year.