Mahindra Finance Q3 Review - Results Strong On Growth, Asset Quality; Margins Stable: Systematix

Systematix Research Report

Mahindra and Mahindra Financial Services Ltd. reported healthy operating performance for Q3 FY23 (marginally ahead of estimates) on the back of continued traction in assets under management growth (21% YoY) and stable net interest margins at 8.2%.

Mahindra Finance's disbursement growth was strong at 22% QoQ, with growth across all vehicle categories viz auto/ utility vehicle, cars, tractors, commercial vehicles, pre owned vehicles.

Asset quality continue to improve as stressed asset pool further declined by 211 basis points to 14.3% on the back of strong collection efficiency and higher write offs (Rs 5 billion).

We remain positive on-

1. continued growth momentum across all vehicles categories,

2. scaling up of new business segments,

3. stable net interest margins, and

4. improving asset quality.

We have revised our earnings estimates upwards by 29%/ 10% for FY23/24 as we factor into higher spreads and lower credit cost. As a result, the return on equity profile improves to 13%/15% for FY24/25.

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