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Mahindra and Mahindra Financial Services
(MMFSL), on a consolidated basis, has reported sharp 188% surge in the net
profit to Rs 623.78 crore in the quarter ended March 2022 (Q4FY2022) compared
with the net profit of Rs 216.34 crore in Q4FY2021. With the improved
collection performance, the company has improved asset quality and margins. The
company has also reversed provisions, boosting the earnings of the company in Q4FY2022. The income
of the company was impacted due to provision for excess interest refund
amounting to Rs 142 crore in compliance with RBI directions.
The credit cost for the company dipped to
80 bps (annualized) in Q4FY2022 compared with 563 bps in the corresponding
quarter last year. The net interest margin (NIM), on calculated basis, of the
company was healthy at 9.31% in Q4FY2022.
Income from Operations declined 6% to Rs 2729.23
crore during the quarter ended March 2022, compared to the corresponding
previous year quarter. Other Income rose 18% to Rs 168.21 crore. The total
Income fell 5% to Rs 2897.44 crore, while interest expenses dipped 14% to Rs 1052.94
crore in the quarter ended March 2022.
The staff cost moved up 13% to Rs 451.23 crore,
while other operating expenses jumped 55% to Rs 350.99 crore. The ensuing
operating profit declined 12% to Rs 1042.28 crore in the quarter ended March
2022.
Depreciation jumped 36% to Rs 49.65 crore
during the quarter under review. Provisions dipped 86% to Rs 130.25 crore. The
profit before tax jumped 257% to Rs 862.38 crore. After accounting for taxation
of Rs 239.96 crore, minority interest of Rs 4.73 and profit from associate of
Rs 6.09 crore, net profits increased 188% to Rs 623.78 crore in the quarter
ended March 2022.
Book
value of the company on
standalone basis stood at Rs 126.7 per share and adjusted book value stood at
Rs 105.6 per share end March 2022. Book value of the company on consolidated
basis stood at Rs 137.0 per share and adjusted book value stood at Rs 107.9 per
share end March 2022.
Business highlights:
The business environment
has returned to normalcy and disbursement trends indicate rural demand and
volumes being back to pre-Covid levels. Contact intensive businesses have reopened
and there has been better visibility on cash flows - both from farm &
infra. These have led to increase in disbursement for the quarter Rs 9202 crore,
a 54% growth year-on-year (and a 15% growth sequentially).
Collection efficiency
during the quarter stood at 100%, with March clocking 109%.
The gross business assets
were at Rs 64961 crore end March 2022, as against Rs 64608 crore end March 2021.
Though Loan Book has been stable on an annual basis, there has been a marginal
increase of 2% sequentially. With uptick in disbursements, the company expects
further growth in business assets.
Intensified collection
efforts and accelerated repossessions / settlements / write-offs has led to further
improvement in Gross Stage 3 (GS-3) - from 11.3% as at December end to 7.7% as
at March end. Stage 2 also showed a similar declining trend sequentially from
17.8% to 14.3% at March end.
As a prudent policy, the
Company now maintains 100% provisions on those loan contracts which have an
ageing above 18+ months. Consequently, the management overlays now stand at Rs 1014
crore.
As of March 2022, the
provision coverage for Stage 3 assets was healthy at 58.1%, well ahead of the
model provisions. In effect, the Net Stage 3 was at 3.4% as on 31 March 2022.
As of March 2022, the
restructured loans stood at Rs 4,019 crore. Amongst this portfolio, assets to
the tune of Rs 1470 crore have Nil overdues end March 2022.
RBI guidelines dated 12
November 2021, requiring changes to and clarifying certain aspects of Income
Recognition, Asset Classification and Provisioning norms (IRACP norms) pertaining
to Advances were extended till 30 September 2022.
Accordingly, the Company
will implement the updated norms under IRACP w.e.f. 1 October 2022. The
management believes that enhanced collection and legal efforts, including
repossessions and settlements should help reduce Gross NPA (IRACP) and minimize
the impact, if any, by the time this circular comes into effect.
In April 2022, the total
disbursement were strong at Rs 2750 crore, delivering 109% growth over April 2021,
primarily due to a much lower base last year, which was impacted severely by
the second wave of Covid-19.
The collection efficiency
(CE) was at 90% for April 2022 (a significant improvement over April 2021 CE
which stood at 72%), higher than historical average for the month of April. The
Company continued to hold adequate liquidity buffer of Rs 8700 crore which
covers 3 months funds requirement.
At the year end, the
Company carried a total liquidity buffer of approximately Rs 9000 crore. The
Company has progressively reduced the chest as macro-economic factors improved.
It shall closely watch external events and shall maintain prudent liquidity
levels.
The Board of Directors has
recommended a dividend of Rs 3.60 per share on equity share of Rs 2 each, i.e.
180%.
Excess
Interest Refund
Based on the inspection
carried out by RBI, the Company has been advised to refund the excess interest
up to March 2022, with respect to certain contracts. Accordingly, the Company
has made provision of Rs 181.70 crore (net of charges due) for the year ended
March 2022, inclusive of Rs 142.80 crore (net of charges due), for the quarter
ended March 31, 2022, which is adjusted against interest income. The Company is
in the process of refunding the said amounts.
Subsidiaries
Mahindra
Rural Housing Finance (MRHFL)
During the quarter ended
March 2022, MRHFL registered income at Rs 330 crore as against Rs 338 crore
during the corresponding quarter last year, a decline of 2% over the same
period previous year. MRHFL registered a Net Loss (after tax) of Rs 1 crore for
the current quarter, as against a PAT of Rs 34 crore during the corresponding
quarter last year. MRHFL has cumulative management overlay of Rs 145.0 crore as
on March 2022, for covering the contingencies that may arise due to the COVID
19 pandemic.
Mahindra
Insurance Brokers (MIBL)
During the quarter ended
March 2022, MIBL registered income at Rs 114 crore as against Rs 86 crore
during the corresponding quarter last year, a growth of 32% over the same
period previous year. The Profit After Tax (PAT) registered was Rs 21 crore
during the quarter ended March 31, 2022, as against Rs 12 crore during the
corresponding quarter last year, a growth of 78% over the same period previous
year.
Mahindra
Manulife Investment Management Private (MMIMPL)
During the quarter ended
March 2022, MMIMPL earned total income of Rs 9.4 crore as compared to Rs 8.4
crore in the same period previous year. MMIMPL incurred a loss of Rs 13.2 crore
compared to a loss of Rs 9.0 crore during the same period of the previous year.
The Average Assets under Management (AUM) of MMIMPL for the
quarter ended March 2022, was Rs 8805 crore across 19 schemes which showed an
increase of 67% over the same period previous year. Of these assets, the
Company managed Rs 5824 crore of average equity assets in the quarter year
ended March 2022, a growth of 135% compared to Rs 2478 crore in the same period
last year.
Mahindra
Manulife Trustee (MMTPL)
During the quarter ended
March 2022, MMTPL earned total income of Rs 0.2 crore compared to Rs 0.1 crore
during the same period previous year. MMTPL made a profit of Rs 0.1 crore during
the current quarter compared to a breakeven (no profit / no loss) position
during the same period of the previous year.
Mahindra
Ideal Finance (MIFL)
During the quarter ended
March 2022, MIFL registered income at LKR 427.5 Million as against LKR 277
Million during the corresponding quarter last year, registering a growth of 54%
over the same period previous year. The Profit After Tax (PAT) during the
quarter ended March 31, 2022, was LKR 44.4 Million as against LKR 55.1 Million
during the corresponding quarter last year, a decline of 19% over the same
period previous year. MIFL and the Company are closely tracking the
macro-economic turbulence in Sri Lanka. Necessary steps are being taken to
safeguard the business, asset quality and ensure adequate liquidity.
Mahindra
Finance USA (MFUSA)
During the quarter ended March 31, 2022, MFUSA registered income
at USD 14.0 Million as against USD 14.4 Million during the corresponding
quarter last year, registering a decline of 3% over the same period previous
year. The Profit After Tax (PAT) during the quarter ended March 31, 2022,
registered was USD 3.4 Million as against USD 5.0 Million during the
corresponding quarter last year, registering a decline of 32% over the same
period previous year.
Financial Performance
FY2022:
For the year ended March
2021 (FY2022), MMFSL reported 7% decline in the Income from Operations to Rs 10858.08
crore. Other Income increased 16% to Rs 542.43 crore. The total Income declined 6% to Rs 11400.51 crore. Interest expenses fell 17% to Rs 4417.37 crore, while
the operating expenses increased 30% to Rs 2656.94 crore leading the operating
profits to decline -10% to Rs 4326.20 crore. Depreciation increased 1% to Rs 151.99
crore, while Provisions & write-off dipped 33% to Rs 2690.38 crore. PBT jumped
123% to Rs 1483.83 crore. The effective tax rates stood at 26.9% in FY2022
compared with 23.1% in FY2021. Net Profit increased 47% to Rs 1136.87 crore in
FY2022 over FY2021.
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Mahindra &
Mahindra Financial Services: Consolidated Results
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Particulars
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2203 (3)
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2103 (3)
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Var %
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2203 (12)
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2103 (12)
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Var %
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Income from
operations
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2729.23
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2895.50
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-6
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10858.08
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11703.79
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-7
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Other Income
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168.21
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142.87
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18
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542.43
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466.71
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16
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Total Income
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2897.44
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3038.37
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-5
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11400.51
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12170.50
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-6
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Interest Expenses
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1052.94
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1226.11
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-14
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4417.37
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5307.57
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-17
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Operating Expense
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802.22
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624.06
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29
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2656.94
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2047.62
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30
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Gross Profits
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1042.28
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1188.20
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-12
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4326.20
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4815.31
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-10
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Depreciation /
Amortization
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49.65
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36.55
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36
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151.99
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150.51
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1
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Provisions and
write off
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130.25
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910.08
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-86
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2690.38
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3998.74
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-33
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PBT before EO
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862.38
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241.57
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257
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1483.83
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666.06
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123
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Extra ordinary
item (EO)
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0.00
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0.00
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-
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20.57
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228.54
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-91
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PBT after EO
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862.38
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241.57
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257
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1504.40
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894.60
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68
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Tax Expense
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239.96
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36.81
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552
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399.08
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153.86
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159
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Net Profit
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622.42
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204.76
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204
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1105.32
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740.74
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49
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Minority Interest
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4.73
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2.50
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89
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13.47
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7.07
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91
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P&L of
Assosiate Co.
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6.09
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14.08
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-57
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45.02
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39.54
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14
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PAT
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623.78
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216.34
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188
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1136.87
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773.21
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47
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EPS
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20.2
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7.0
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9.1
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4.7
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*Annualized on
current equity of Rs 246.60 core excluding EO and relvant tax. Face Value: Rs
2, Figures in Rs crore
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Source:
Capitaline Corporate Database
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