M&M Financial shares drop nearly 5% on muted growth in June disbursements

The Mahindra Finance stock declined as much as 4.6% in trade on Wednesday to hit an intraday low of ₹288.6 apiece on the National Stock Exchange of India (NSE). However, the stock later erased most of the losses to trade 0.45% lower at ₹301 by 1:00 pm.

In a stock exchange notification on Tuesday, Mahindra and Mahindra Finance said that its estimated disbursements in June grew 3% to ₹4,370 crore compared with the same month a year ago.

For the full April-June quarter (Q1FY25), disbursement was recorded at about ₹12,730 crore, registering a growth of 5% compared with the year-ago period.

Mahindra Finance added that business assets at the end of June 2024 stood at approximately ₹1.06 lakh crore, up nearly 4% over March 2024 and around 22% over June 2023.

The collection efficiency was at 95% for June 2024 compared with 96% for June 2023, it added.

“The company continued to enjoy a comfortable liquidity position on its balance sheet, with a liquidity chest of over ₹8,000 crore,” the financial services arm of Mahindra and Mahindra Group said.

M&M Finance shares have risen just over 8% year-to-date in 2024 compared with an 11.7% rise in the benchmark Nifty 50 index during the same period. Over the past one year, the stock has in fact fallen over 13%.

During the quarter ended March 2024 (Q4FY24), the NBFC had reported a 10% decline in its standalone net profit to ₹619 crore. The company was also under pressure after it reported a fraud in its Aizawl branch after a fact-finding assessment during the March quarter that identified 2,887 loan accounts as potentially fraudulent in nature.

The fraud was related to the retail vehicle loans disbursed by the company and involved collusion between the company’s employees and external parties, including vehicle dealers and bank employees.