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Mahindra and Mahindra Financial Services
(MMFSL), on a consolidated basis, has reported 213% surge in the net profit to
Rs 1099.78 crore in the quarter ended September 2021 (Q2FY2022). Income from
Operations declined 5% to Rs 2818.04 crore, while other Income jumped 13% to Rs
132.54 crore. The total Income fell 4% to Rs 2950.58 crore, while interest
expenses declined 17% to Rs 1142.63 crore in the quarter ended June 2021.
The staff cost moved up 9% to Rs 382.22 crore,
while other operating expenses increased 72% to Rs 250.96 crore. The ensuing operating
profit declined 3% to Rs 1174.77 crore in the quarter ended June 2021.
The Overheads to
Average Assets were higher at 2.7% as the economic activity and collection
efforts intensified in Q2.
Depreciation declined 14% to Rs 34.21 crore
during the quarter under review. The company has written back provisions of Rs 315.54
crore. The profit before tax increased 191% to Rs 1456.10 crore. After
accounting for taxation of Rs 385.20 crore, the net profits increased 213% to
Rs 1099.78 crore in the quarter ended June 2021.
During the quarter, the
Company increased its shareholding in Ideal Finance Limited (IFL), Sri Lanka
from 38.2% to 58.2%. IFL is now a subsidiary of the Company. This stake
increase has resulted in revaluation of existing equity stake in IFL, which led
to a one-time revaluation gain of Rs 21 Crore, which is shown as Exceptional
Item in the Q2 FY22 consolidated financials.
Book
value of the company on
standalone basis stood at Rs 114.9 per share and adjusted book value (net of
NNPA and 10% of restructured loans) stood at Rs 80.6 per share end March 2021. Book
value of the company on consolidated basis stood at Rs 123.9 per share and adjusted
book value (net of NNPA and 10% of restructured loans) stood at Rs 80.5 per
share end September 2021.
Business
highlights
The disbursements were
at Rs 6475 crore, a growth of 61% Y-o-Y and 67% on a sequential basis. But for
the supply side issues, the disbursements would have grown further. The Company
improved market share in its lead products.
The gross business
assets at Rs 63618 crore declined as against Rs 67773 crore as on September
30, 2020. Sequentially, however, the decline has been arrested and going
forward the company expects a sequential improvement in business assets.
Asset quality
The Gross NPA showed
smart recovery from 15.5% in June to 12.7% in September, thereby releasing Rs 1002
crore from the impairment cost provisions.
During the quarter, the
collection efficiency kept on improving month on month - 95% in July, 97% in
August and peaking at 100% in September.
The repossessions also
accelerated with the Company repossessing 15,861 vehicles during Q2, up from
6,574 in Q1.
The Company continues
to be well-capitalised with a capital adequacy ratio of 26.1%. It has
sufficient provision coverage on Stage 3 loans at 53.0% and continues to hold
sufficient liquidity chest.
The Company has a
restructured book of 104,130 contracts with underlying AUM of Rs 4390 crore.
Out of these, 96,391 contracts are classified in Stage 2 as the Company
believes that the stress in these contracts is temporary, caused by second wave
of Covid-19. Over and above the model provision applicable on Stage -2 assets
on these restructured loan contracts, an additional provision of Rs 153 crore is
made during the quarter and Rs 310 crore is made during the half-year ended
September 2021. As these contracts start repaying the restructured instalments,
the Company will review the additional provision and staging of these
contracts.
Assets and
provisioning
The Company expects
further improvements in quarters to come. The NPAs are adequately provided for.
The total provision coverage for Stage 3 assets was healthy at 53%, well ahead
of the model provisions. Consequently, the net NPA was at 6.4% end September
2021. By year end, the Company aims to maintain the net NPA below 4%.
The cumulative
management overlay as on 30 September 2021 stood at Rs 2112 Crore.
The Company carried a
total liquidity buffer of over Rs 9600 crore. With adequate macro liquidity and
uptick in economic activity, the Company plans to progressively reduce the
chest in coming quarters.
New
Vectors of Growth
The Company has
identified the following three initiatives to propel growth and further
diversify the balance sheet:
- Digital finance –
focusing on personal loans and consumer durable loans
- Leasing and
-Lending to SME segment
In the Digital Finance
Business, the Company has initiated cross-selling to existing customers. In
Leasing, the immediate focus will be on corporate segment with initiatives
being taken to penetrate in retail segment. In SME, the focus is on deepening
presence in the larger Mahindra Eco-system with a mix of short term cash flow
backed lending and term lending.
The teams are in place
and the Company sees early traction in each of these segments. During the
quarter, under the Leasing vertical, the Company launched a new retail brand
“Quiklyz”. The objective is to build a critical mass of retail leasing portfolio
over a period of time.
Subsidiaries
Mahindra Rural
Housing Finance (MRHFL)
During the quarter
ended September 2021, MRHFL registered income at Rs 361 crore as against Rs 377
crore during the corresponding quarter last year, a decline of 4% over the same
period previous year. The Profit After Tax (PAT) at Rs 46.7 crore during the
quarter ended September 30, 2021, was marginal lower compared to Rs 57.4 crore during
the corresponding quarter last year.
MRHFL has implemented
resolution plans to relieve COVID19 pandemic related stress of eligible
borrowers in 2,64,234 loan accounts with a total outstanding of Rs 2634.5 crore
end September 2021.
Of these, total loan
accounts which were restructured during the half year, for 2,33,016 cases,
having an outstanding amount of Rs 2,395.7 crore. Over and above the model
provision applicable on Stage -2 assets on these restructured loan contracts,
an additional provision of Rs.97.9 crore is made during the half-year ended
September 30, 2021.
The Company has
cumulative management overlay of Rs 121.1 crore as at 30 September 2021 for
covering the contingencies that may arise due to COVID19 pandemic.
Mahindra Insurance
Brokers Limited (MIBL)
During the quarter
ended September 2021, MIBL registered income at Rs 77 crore as against Rs 60
crore during the corresponding quarter last year, a growth of 28% over the same
period previous year. The Profit After Tax (PAT) registered was Rs 10 crore during
the quarter ended June 30, 2021, as against Rs 4 crore during the corresponding
quarter last year.
Mahindra Manulife
Investment Management Private Limited (MMIMPL)
During the quarter
ended September 2021, MMIMPL earned total income of Rs.8.6 crore as compared to
Rs 7.4 crore in the same period previous year. The company incurred a loss of
Rs 10.8 crore compared to a loss of Rs.4.3 crore during the same period of the
previous year.
The Average Assets
under Management (AUM) of MMIMPL for September-21 quarter were Rs 6,687 Crore,
up from Rs 5,664 crore for June 2021. About 60% of the closing AUM comprises
Equity Mutual Fund AUM.
Mahindra Manulife
Trustee Private Limited (MMTPL)
During the quarter
ended September 30, 2021, MMTPL earned total income of Rs 0.2 crore compared to
Rs 0.1 crore during the same period previous year. The company made a profit of
Rs 0.1 crore compared to a breakeven (no profit / no loss) position during the
same period of the previous year.
Ideal Finance Ltd
(IFL)
During the quarter
ended September 30, 2021, IFL registered income at LKR 284.6 Million as against
LKR 265.3 Million during the corresponding quarter last year, registering a
growth of 7% over the same period previous year. The Profit After Tax (PAT)
during the quarter ended September 30, 2021, was LKR 59.3 Million as against
LKR 49.9 Million during the corresponding quarter last year, a growth of 19%
over the same period previous year.
The Company has
completed acquisition of addition 20% equity share capital of IFL on 8 July
2021, resulting in an increase in the Company's equity stake in IFL from 38.2%
to 58.2%. Consequent to this investment, IFL has become a subsidiary of the
Company.
Financial Performance H1FY2022:
For the half year
ended September 2021 (H1FY2022), MMFSL reported 1% decline in the Income from
Operations to Rs 5283.26 crore, against the corresponding previous year period.
Other Income increased 32% to Rs 254.73 crore. The total Income declined 10% to
Rs 5537.99 crore. Interest expenses dipped 17% to Rs 2293.71 crore, while the
operating expenses increased 28% to Rs 1169.05 crore leading the operating
profits to decline 15% to Rs 2075.23 crore. Depreciation increased 14% to Rs 66.97
crore, while Provisions & write-off surged 67% to Rs 2689.83 crore. Pre tax
loss came in at Rs 681.57 crore. Net loss was at Rs 473.94 crore in H1FY2022.
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Mahindra &
Mahindra Financial Services: Consolidated Results
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Particulars
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2109 (3)
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2009 (3)
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Var %
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2109 (6)
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2009 (6)
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Var %
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2103 (12)
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2003 (12)
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Var %
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Income from
operations
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2818.04
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2953.49
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-5
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5283.26
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5945.87
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-11
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11703.79
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11457.61
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2
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Other Income
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132.54
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117.01
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13
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254.73
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193.32
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32
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466.71
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538.85
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-13
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Total Income
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2950.58
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3070.50
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-4
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5537.99
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6139.18
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-10
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12170.50
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11996.46
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1
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Interest Expenses
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1142.63
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1368.54
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-17
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2293.71
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2769.70
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-17
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5307.57
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5390.56
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-2
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Operating Expense
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633.18
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496.59
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28
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1169.05
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915.60
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28
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2047.62
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2583.92
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-21
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Gross Profits
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1174.77
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1205.37
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-3
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2075.23
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2453.88
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-15
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4815.31
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4021.98
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20
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Depreciation /
Amortization
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34.21
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39.58
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-14
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66.97
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77.44
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-14
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150.51
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146.87
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2
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Provisions and
write off
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-315.54
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665.82
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-147
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2689.83
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1614.67
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67
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3998.74
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2318.98
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72
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PBT before EO
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1456.10
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499.97
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191
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-681.57
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761.77
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PL
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666.06
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1556.13
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-57
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Extra ordinary
item (EO)
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20.57
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0.00
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-
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0.00
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228.54
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-
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228.54
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0.00
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-
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PBT after EO
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1476.67
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499.97
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195
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-681.57
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990.32
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PL
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894.60
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1556.13
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-43
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Tax Expense
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385.20
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135.06
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185
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-182.75
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206.71
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LP
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153.86
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516.21
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-70
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Net Profit
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1091.47
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364.91
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199
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-498.82
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783.61
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PL
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740.74
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1039.92
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-29
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Minority Interest
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3.16
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1.16
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172
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3.48
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1.56
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123
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7.07
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10.67
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-34
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P&L of Assosiate
Co.
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11.47
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-12.40
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LP
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28.36
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1.02
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2667
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39.54
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45.90
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-14
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PAT
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1099.78
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351.35
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213
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-473.94
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783.07
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PL
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773.21
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1075.15
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-28
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EPS
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35.2
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11.4
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-7.7
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9.8
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4.7
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8.7
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*Annualized on
current equity of Rs 246.44 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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