Mahindra Fin must get a grip on its costs, NIM

Shares of Mahindra & Mahindra Financial Services Ltd (Mahindra Finance) have fallen by 1.6% since it reported its November growth numbers last week, while the Nifty 50 index has risen 1.3%. The non-banking financial company saw fresh loan disbursements of ₹5,300 crore in November, remaining unchanged from the preceding month.

- Manvi Agarwal

Year-on-year growth stood at about 16%, which is in line with the growth seen so far this year. Total assets under management (AUM), also referred to as gross business assets, stood at ₹96,600 crore in November, up 26% from the previous year.

However, monthly collection efficiency was lower, dropping to 94% from 96% in November 2022. It’s worth mentioning here that Diwali was in November this year and in October in 2022. "This explains the strong year-on-year growth in disbursements and the slight decline in collection efficiency," said Motilal Oswal Financial Services.

The festive period traditionally sees higher demand for automobiles, a key asset class for the company’s lending business. This is also the reason Mahindra Finance is likely to report relatively strong December quarter (Q3FY24) numbers.