Mahindra & Mahindra Finance Q1 standalone net plummets 75%

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Published: July 24, 2019 12:56:59 AM

Profit before tax declined 75% y-o-y to Rs 104 crore as the total expenses rose by 51% y-o-y as a result of spike in financial-instruments impairment costs, finance costs and trippled fee expenses.

The company has a diversified loan book as utility vehicles constituted 26% to the total AUM, tractors 17%, cars 21%, commercial vehicles 19% and pre-owned vehicles 9%, as on June 30, 2019.

Mahindra & Mahindra Financial, a tractors and auto financier, on Tuesday reported a 75% y-o-y fall in the standalone net profit to `68 crore in the June quarter on account of doubled financial-instruments impairment cost than the last year and a 33% y-o-y increase in finance costs.

However, the total income rose 24.3% y-o-y to Rs 2,412.50 crore led by a 24% y-o-y increase in the interest income to Rs 2,366 crore. While there was no dividend income in the June quarter last year, the lender earned over Rs 9 crore in the June quarter of FY20. Fee income rose 6.25% y-o-y. Net interest income (NII) rose 17% y-o-y to Rs 1,265 crore.

Profit before tax declined 75% y-o-y to Rs 104 crore as the total expenses rose by 51% y-o-y as a result of spike in financial-instruments impairment costs, finance costs and trippled fee expenses.

The standalone assets under management (AUM) stood at Rs 71,406 crore against Rs 58,711 crore a year ago, registering a growth of 22%. Total loan book stood at Rs 62,396 crore against `51,595 crore a year ago. Government support towards road construction and rural housing likely to boost commercial demand for tractors, the tractor financier said. Whereas, higher cost of ownership, which includes increased fuel price, higher insurance expense, dearer interest rates and increased safety norms, resulting in reduction in growth rate of the passenger vehicles, they added.

The company has a diversified loan book as utility vehicles constituted 26% to the total AUM, tractors 17%, cars 21%, commercial vehicles 19% and pre-owned vehicles 9%, as on June 30, 2019.

The lender’s asset quality improved significantly as the gross non-performing assets (NPA) ratio decreased 160 basis points (bps) sequentially to 7.40% in Q1FY20. The net NPA declined by 50 bps q-o-q to 5.70%. The provision coverage ratio increased to 24.9% from 19.2% in the March quarter. The lender made provisions of Rs 619 crore, up 110% from Rs 293 crore a year ago.

The funding of the lender majorly came from non-convertible debentures (NCDs), which is 33.3%, bank loans (28.3%) and fixed deposits (12.3%).

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