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ICICI Securities Report
Mahindra and Mahindra Financial Services Ltd.'s Q2 FY21 earnings beat was buoyed by lower than anticipated credit cost and gross non-performing loans contracting 220 basis points to 7%.
Some indicators of future stress are -- 13% of 75% moratorium pool has not been honoured even with a single instalment, 7.2% stage-two loans, 0.5% standstill NPLs, 82% September collection efficiency and estimated 8% restructuring -- all of which suggest improving trends but with the travails far from over.
With 2.2% existing contingency buffer, we expect 4% credit cost and 11% stage-three assets for FY21E.
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