M&M Financial gains after Q1 PAT spurts 298%

Mahindra & Mahindra Financial Services gained 2.09% to Rs 212.25 on BSE after the NBFC posted a 298.41% jump in consolidated net profit to Rs 432.12 crore in Q1 June 2020 from Rs 108.46 crore reported in Q1 June 2019.

Total income rose 16% year on year to Rs 3310.65 crore in Q1 June 2020. The result was announced on Saturday, 18 July 2020.

Consolidated profit before tax (PBT) for Q1 June 2020 was at Rs 503.78 crore, rising 215% from Rs 159.95 crore in the same period last year. Total tax expense surged 39% to Rs 71.66 crore in Q1 June 2020 over Q1 June 2019.

M&M Financial Services PBT includes an exceptional item in the nature of capital gain of Rs 229 crore on the basis of fair valuation of retained interest of 51% post stake dilution of 49% in its subsidiaries, Mahindra Asset Management Company (MAMCPL) and Mahindra Trustee Company (MTCPL), vide joint venture agreement with Manulife Asset Management (Singapore).

The NBFC's provisions and write offs stood at Rs 948.8 crore in Q1 June 2020, jumping 40% from Rs 676.9 crore in the same period last year. M&M Finance said an additional charge of Rs 664.5 crore has been added to provisions on account of COVID-19.

On a standalone basis, the company's net profit jumped 127.7% to Rs 155.79 crore on 10.3% rise in total income to Rs 2661.04 crore in Q1 June 2020 over Q1 June 2019.

The total value of assets financed for the quarter ended 30 June 2020 was at Rs 3,489 crore. The company said it maintained market share in its lead products, but with declining vehicle sales post lockdown, the disbursements have been lower. The standalone Assets Under Management (AUM) stood at Rs 81,436 crores as on 30 June 2020, as against Rs 71,406 crores as on corresponding reporting date last year, registering a growth of 14%.

Meanwhile, the board has approved a proposal to issue equity shares on a rights basis to its existing shareholders for an amount not exceeding Rs 3,500 crores. The company approved the rights issue instrument for a total number of 61,77,64,960 equity shares. The issue price has been fixed as Rs 50 per equity share. The issue opening date is 28 July 2020 and the closing date is 11 August 2020.

Mahindra & Mahindra Financial Services, part of the $20.7 billion Mahindra Group, is a non-banking finance company.

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