Mahindra Finance tanks 8% on deferring Q4 results due to Rs 150 cr fraud

Shares of Mahindra and Mahindra Financial Services were down by 7.9 per cent at Rs 256 a piece on the BSE in Tuesday’s intraday trade. The stock price fall came after the company deferred a board meeting to review and approve its financial results from April 23 on account of a financial fraud. 

On Monday, Mahindra Finance revealed that a financial fraud was detected during the end of 4th quarter of the financial year ended 31st March 2024. The fraud was detected at one of the company's branches in the North East. In respect of retail vehicle loans disbursed by the company. 

The fraud involved forgery of KYC documents leading to embezzlement of company funds with the investigations in the matter at an advanced stage, the management said. 

“The company estimates that the financial impact of this fraud is unlikely to exceed Rs.150 crores. Investigations are underway, and necessary corrective actions have been identified and are at various stages of implementation, including arrest of a few persons involved,” the company said in an exchange filing. 

Furthermore, in view of this development, the company deferred its board meeting to approve March quarter results to a later date. 

At 10:02 AM, the company’s shares were trading 4.07 per cent lower at Rs 267.50 a piece. A combined 4,23,887 shares of the company changed hands on the BSE. 

The shares of the company have shedded 2.7 per cent in the last one month, while it gave away 2.3 per cent in the last six months. The stock of the NBFC is currently trading at price to earnings multiple of 12.17 times. 

The company recorded a 12 per cent year-on-year (Y-o-Y) decrease in net profit to Rs 553 crore for the October-December quarter due to a significant increase in credit costs. The net profit for the company was Rs 629 crore in Q3 FY23. However, sequentially, there was a 135 per cent increase in profit from Rs 235 crore in Q2 FY24.

The net interest income (NII) of the NBFC clocked a 10 per cent rise to Rs 1,815 crore, while the disbursements grew by 7 per cent to Rs 15,436 crore from a year ago.