M&M Finance eyes 15%-20% disbursements growth in FY24

Mahindra & Mahindra Financial Services (Mahindra Finance) will likely post a 15%-20% annual growth in loan disbursements in the next financial year, owing to a robust demand for tractor and used-vehicle loans, among others, vice chairman and MD Ramesh Iyer told FE.

“Very clearly, the sentiments are continuing to be positive, that is the first trend we are seeing. People definitely want to do more work and all activities seem to be higher than the pre-Covid level. That is really driving the overall offtake or volume… As far as the next year is concerned, various published reports tell us that there will be a growth of 8%-12% on various product fronts. The pre-owned vehicle demand continues to be very attractive and robust, so we are confident that even at this base number that we are in, we would see a minimum of 15%-20% growth…” the MD said.

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According to Iyer, growth will come from three areas. While pent-up demand will drive volumes, price increase will contribute to rise in disbursements. Thirdly, Mahindra Finance is gaining market share in certain products as it has extensive reach and the company works with all the OEMs (original equipment manufacturers).

Mahindra Finance’s loan book grew 21% year-on-year (YoY) to Rs 77,344 crore as on December 31, according to its Q3FY23 investor presentation. Disbursements for the quarter ended December were at Rs 14,467 crore, up 80% on a Y-o-Y basis. Auto and utility vehicles loans accounted for 34% of disbursements, while tractor and car loans accounted for 12% and 17%, respectively.

“Even the AUM growth will be in double-digit (in FY24). This year also, I think we are registering an 18%-20% AUM growth over last March. With the disbursement growth at 15%-20%, we would expect that the AUM growth will be maintained,” Iyer said.

“Next year, we are planning to open 50 branches, at least 30%-40% of the branches will come in the northern belt. Madhya Pradesh, Andhra Pradesh and parts of Tamil Nadu will also get new branches,” Iyer said.

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The gross stage-3 ratio or GNPAs will likely reduce to below 5% in the next few quarters, the MD said. As on December 31, the GNPA ratio stood at 5.9%, lower than 6.7% as on September 30. “We continue to see the declining trend (in GNPAs) because customers are able to deploy their vehicles and tractors, their activity level is high and they are earning sufficiently. If this kind of positivity continues, we will actually be going much below 5% in the next few quarters or so…,” Iyer said.