Mahindra Finance assets grow 27% in FY23 on strong credit offtake

Credit quality improves as stage-3 assets dip to 4.6%

Reflecting strong credit offtake in the system, Mahindra & Mahindra Financial Services Ltd (Mahindra Finance) posted a 27 per cent rise on Year on Year (YoY) basis in its business assets at Rs 82,300 crore at end of March 2023 (FY23). Sequentially, the assets rose by seven per cent over December 2022, reflecting strong credit offtake in the system.

Its disbursement in the fourth quarter ended March 2023 (Q4FY23) was Rs 13,750 crore, showing a growth of 50 per cent YoY. For FY23, disbursement expanded by 80 per cent YoY at Rs 49,500 crore, Mahindra Finance informed BSE. Its stock closed 2.44 per cent higher at Rs 237.55 per share on BSE.

According to rating agency Crisil. non-banking finance companies are expected to show credit growth of 13-14 per cent in fy24 versus 12-13 per cent in fiscal 2023. The growth would continue to be driven by the retail segment.

The finance company has indicated that growth would be supported by a robust demand for tractor and used-vehicle loans, among others.

The Collection Efficiency (CE) was at 105 per cent for March 2023. The current quarter’s CE was at 99 per cent (100 per cent for Q4FY22).

Mahindra Finance said its stage-3 level assets, remaining 90 Days past due (90 DPD), continued to improve. It was expected to be 4.6 per cent at the end March 2023, lower than 5.9 per cent at the end December 2022. Also stage-2 assets – loans remaining 60 DPDs – are likely to be 6.7 per cent at end of March, down from 8.4 per cent in December 2022.

The Gross Non-Performing Assets (GNPAs) are estimated to be higher by Rs 1,200 crore. They will not require any additional provisions over and above the Expected Credit Loss (‘ECL’) provision for FY2023. The company continued to maintain a comfortable liquidity chest of about three months’ requirement, it added.