MARKETS

Mahindra Finance Up 6% as Health Spending Hits 52-Week High in November

The company recorded disbursements of around Rs 4,500 crore in November 2022, providing an annual growth of 75 per cent on the backdrop of a positive macro environment.

Mahindra & Mahindra Financial Services (Mahindra Finance) shares surged 6.4% intraday on Monday after the company announced it had paid around 4,500 crores, touching a 52-week high of Rs 243.60. Against the backdrop of an improving macro environment, the year-on-year growth rate was 75%.

Shares of Mahindra Group non-banking financial company (NBFC) surpassed the previous high of Rs 235 touched on September 15, 2022. The stock was up 6% at Rs 242 at 10:53 am, while the stock was up Rs 0.42. The S&P BSE Sensex fell 1%. The average off-exchange volume on the NSE and BSE jumped more than threefold, with a combined 9.3 million shares changing hands.

Year-to-date (YTD) disbursements of NBFCs stood at around Rs 31,050 crore, registering a growth of 99%. Healthy disbursement trends have led to a solid gross asset book of around Rs 76,300 crore, a gain of around 3.4% compared to September 2022. It has resulted in an increase of about 17.5% compared to March 2022.

Collection Efficiency (CE) in November 2022 is 96%, compared to 94% in the same period last year. Mahindra Finance said the month-on-month decline in Phase II assets was estimated at less than 9% as of end-November compared to October 2022, while the month-on-month decrease in Phase III assets remained below 7% by the end of the month. It added that the company expects to improve further the Phase II and Phase III holdings in December 2022.

Gross Non-Performing Assets (GNPA) (based on revenue recognition, asset classification and provisioning specification) are estimated to be around Rs 1,200 crore higher than Phase 3 assets, reaffirming management’s view that additional provisions may not be required, Mahindra Finance said in a press release FY23 expected credit loss (ECL) provision.

Meanwhile, analysts at Prabhudas Liladher said in their September quarter results update that Mahindra Finance’s asset growth has resumed, and we are witnessing asset growth starting to happen, not through any single product or any product. Single geography, so that’s a result of the productivity growth that we see across the country. Outside the taxi segment, especially aggregators, the company sees strong demand amid rising customer cash flow and positive macro indicators.

Management said the impact of the RBI ban on repossessions is limited to 2,000/3,000 vehicles per month. It has had healthy discussions with regulators and is optimistic that the ban will be lifted soon. The company has introduced a settlement program under which customers whose vehicles will be repossessed will be allowed to settle their accounts. The brokerage highlighted in the conference call that it has relocated about 6,000 employees under contract.

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