Mahindra & Mahindra Financial Services shares fall despite reporting 55% jump in profit in Q2

Shares of Mahindra & Mahindra Financial Services, the country's leading non-banking finance company, dropped as much as 9.81% to an intraday low of ₹268.25 on the National Stock Exchange (NSE) on Thursday, October 22, a day after it reported its September quarter earnings.

M&M Financial Services post market hours on Wednesday reported a standalone net profit of ₹882 crore at the end of the second quarter of financial year, marking an increase of 55% from ₹569 crore in the same period last year.

Its total revenue from operations advanced 15% to ₹5,164 crore at the end of September quarter from ₹4,473 crore a year earlier.

The company said that it earned ₹4,732.46 crore from interest income, up 13% from ₹4,177.92 crore in the year-ago period. Its dividend income rose 49% to ₹79.89, rental income advanced 17% to ₹48.68 and income from fees, charges and commission surged by 40% to ₹275 crore at the end of the second quarter.

The company said that its assets under management (AUM) rose 15% annually and disbursements rose by 22%.

Mahindra Finance recorded quarterly disbursements of ₹ 16,499 crore, registering 22% year on year (YoY) growth. The company’s business assets grew 15% YoY, reaching ₹1,46,512 crore. Asset quality improved, with stage 3 assets at 3.4% (vs 3.9% in Q2FY26) and stage 2 assets at 4.7% (vs 5.8% in Q2FY26), indicating stability of the portfolio. Collection efficiency at 97% (vs 96% in Q2FY26), the Mumbai-based company said in a press release.

M&M Financial Services' credit cost moderated by 62 basis points to 1.6% at the end of September quarter.

"Our Q2 performance gives us further confidence that the changes we have been making are translating into stronger and more consistent business outcomes. With disbursements up 22% on broad-based growth, credit costs contained at 1.6%, and profit growth of 55%, we are encouraged by the momentum and remain focused on disciplined execution towards our FY31 ambition," said Raul Rebello, MD & CEO, Mahindra Finance.

The company maintained its leadership position in tractor financing business and remained amongst the leading NBFCs for financing passenger vehicles (PVs), used passenger vehicles and light commercial vehicles (LCVs). Udaan, our flagship transformation program, is now fully embedded across vehicle lending and collections, the company added.

What global investment firms said on M&M Financial Services Q2

CLSA in a note said that its calculated net slippages declined 15 basis points (bps) YoY and the stage 2 and 3 loans ratio declined to a multi-year low.

Disbursement growth has accelerated over the past two quarters and should translate into stronger AUM growth in the coming quarters. That said, a largely fixed-rate loan book and 50% floating-rate borrowings could put pressure on spreads in a rate hike cycle, CLSA said.

Citi said that the company navigated first half volatility well augmenting underwriting scorecards, portfolio monitoring, and collections.

Loan spreads narrowed by 30 bps as growth tilted toward trade advances (incremental 3% QoQ delta) and lifted liquidity to 10% of balance sheet size.

HSBC said that healthy operating performance was driven by higher fee income and lower credit cost led to beat in their 2QFY27 estimates.

As of 11:20 am, M&M Financial Services shares traded 5.46% lower at ₹280.60, underperforming the NIFTY LARGEMIDCAP 250 index which was down 0.4%.