Mahindra Finance reports net loss of Rs 223 cr in December quarter

Mahindra & Mahindra Financial Services on Thursday reported a consolidated net loss of Rs 223 crore for the third quarter ended December 2020.

The financial services provider had posted a net profit of Rs 475 crore in the year-ago quarter.

The total income declined by 3 per cent to Rs 2,993 crore during the third quarter as against Rs 3,081 crore in the same quarter last fiscal, Mahindra Finance said in a release.

However, for the nine months ended December 2020, the company has posted a 34 per cent decline in consolidated net profit to Rs 561 crore compared to Rs 847 crore a year ago.

Total income during April-December was up 3 per cent at Rs 9,132 crore as against Rs 8,856 crore in the same period previous fiscal.

On a standalone basis, there was a net loss of Rs 274 crore in the third quarter. It had posted a net profit of Rs 365 crore in the year-ago period.

Standalone income was down 2 per cent at Rs 2,575 crore.

On asset front, the company's gross stage levels (or bad loans) soared to 9.99 per cent at December-end from 8.49 per cent in a year ago. The net stage 3 was slightly lower at 6.57 per cent compared to 6.67 per cent.

As on December 31, 2020, the cumulative amount of management overlay provisions stood at Rs 1,064 crore to reflect the macroeconomic outlook.

The company has initiated various cost rationalisation measures and expects a benefit from the same to continue in the future.

As of December 31, the company's customer base has crossed 7.1 million, it said.

The company's total disbursement for the April-December period stood at Rs 13,031 crore.

The capital and debt position are strong and the ALM (asset-liability management) position is well balanced.

"With surplus liquidity over Rs 90 billion as at the end of the quarter i.e 15 per cent of the overall borrowings, the company is in a very comfortable position to meet its future repayment and growth requirements," Mahindra Finance said.

During the quarter, there were certain segments of customers who did not participate in asset acquisition and there was also non-availability of certain models leading to a drop in business. While the overall cash flows of the customer showed an improvement, the earnings have not yet returned to the pre-COVID situation, it said.

The farm output has been very encouraging and the farm cash flow has started to come in from December. While the restructuring opportunity was offered to customers, considering the expected cash flow in the fourth quarter, the customers have not opted for the same, it added.

"The rural sentiments remain positive and we expect to benefit from the same during the fourth quarter," it noted.

Shares of Mahindra Finance closed 4.42 per cent down at Rs 164.20 apiece on BSE.