Mahindra Finance Q2 Results Review - Elevated Credit Cost Impacted Earnings: ICICI Securities

ICICI Securities Report

Mahindra & Mahindra Financial Services Ltd.’s Q2 FY25 financial performance continued to showcase seasonality – evident in RoA falling to 1.2% versus 1.8% QoQ due to higher delinquencies in the tractor segment.

While credit cost inched up to 2.4% in Q2 FY25 versus 1.5% QoQ, management sounded confident of maintaining it at 1.3–1.5% during H2 FY25, as it believes higher slippages in Q2 FY25 are transient and would not result in higher loan losses.

Further, it highlighted that net interest margins shall improve in H2 FY25 with higher growth in high-yield businesses like SME and used vehicles. While disbursement during H1 FY25 remained muted, management highlighted that Mahindra Finance has not lost market share and AUM growth over the next two-three years would largely mirror system growth.

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