Loan growth, lower cost targets positive for M&M Financial Services

Mahindra & Mahindra Financial Services or M&MFS may enjoy favourable tailwinds in the second half of 2025-26 (H2FY26) with rising demand for its core line of vehicle finance and also lower cost of finance.

- DEVANGSHU DATTA

Also, while it has high credit costs, the asset quality has improved with accelerated write offs. M&M FS has a deep rural presence across 500,000 villages, and a 12 million customer base.

It is ideally positioned to benefit from stronger rural demand. The long-term target is to push assets under management or AUM to over ₹3 trillion by 2030 from the current ₹1.27 trillion.

It has improved its underwriting architecture, institutionalised artificial intelligence or AI-driven collections and enhanced risk governance systems. While holding onto leadership in vehicle finance, it’s looking to expand operations across housing finance, LAP, insurance, and investment distribution.

It has invested in AI integration across underwriting and collections to unlock scale while holding opex in the 2.5-2.7 per cent band.

Over a five-year timeframe, management is guiding for 18-20 per cent loan growth, and lower credit costs of 1.3-1.7 percent and return on assets or RoA of above 2.2 per cent. M&MFS reported a net profit of ₹570 crore in Q2FY26, up 54 per cent year-on-year (Yo-Y).