Mahindra Finance profit rises 55% to 882 crore rupees in September quarter
Key Facts
Mahindra & Mahindra Financial's standalone net profit rose to 882 crore rupees in the second quarter of fiscal 2027, ended September 2026, according to the company's earnings statement. Profit grew 55% year on year from 569 crore rupees in the corresponding period, alongside improved operating profit and lower credit costs. Standalone net profit for the first half of the fiscal year reached 1,780 crore rupees. That compared with 1,099 crore rupees in the first half of the previous fiscal year, an increase of 62% year on year. Operating profit before provisions rose to 1,791 crore rupees in the September quarter from 1,499 crore rupees a year earlier. This represented operating profit growth of 20%, a slower pace than the increase in standalone net profit during the same quarter.
The increase in profit came alongside an expansion in disbursements, which reached 16,499 crore rupees in the second quarter of fiscal 2027, according to the company's official disclosure. The company had disbursed 13,514 crore rupees in the corresponding quarter of the previous fiscal year. This represented year-on-year disbursement growth of 22%, compared with growth of 15% in business assets under management. Those assets stood at 1,46,512 crore rupees at the end of September 2026, according to the statement. That compared with 1,27,246 crore rupees at the end of September 2025, as the expansion in new disbursements was accompanied by an increase in the assets managed by the company.
On lending profitability, net interest margin held steady at 7.0% for the quarter, the same level as in the corresponding quarter of the previous fiscal year, according to the official results table. The first-half margin rose to 7.1% from 6.8% in the first half of the previous fiscal year. This improvement in the first-half margin coincided with yield pressures explained by the chief executive during the earnings call, according to a transcript published by Investing.com. He said maintaining a liquidity buffer and seasonal trade advances that generated no yield weighed on loan income and yields. Describing the two factors, the chief executive said: "These two factors are not structural but are more seasonal, and they are causing compression." Management thus linked yield pressures to seasonal factors involving liquidity and trade advances, while the quarterly margin remained stable from a year earlier.
On credit costs and asset quality, quarterly credit costs fell to 630 crore rupees, according to Mahindra Finance's earnings statement. These costs stood at 751 crore rupees in the corresponding quarter of the previous fiscal year, representing a year-on-year decline of 16%. Estimated quarterly collection efficiency improved to 97%, according to the company's business update for the second quarter of fiscal 2027. Collection efficiency stood at 96% in the corresponding period of the previous fiscal year. Total Stage 2 and Stage 3 assets also fell to 8.1%, compared with 9.7% in the corresponding quarter, according to Investing.com's coverage of the company's results presentation. The decline in the share of these assets came alongside improved collections and lower credit costs, as well as growth in disbursements and assets under management.
Against the backdrop of the second-quarter fiscal 2027 results, the capital adequacy ratio stood at 18.0%, according to the results presentation cited by Investing.com. The Tier 1 capital ratio stood at 16.2% at the end of the same quarter. Looking ahead, the chief financial officer said during the earnings call that funding costs were trending higher, putting pressure on margins. Describing the expected trajectory, he said: "Our cost of funds will move higher." On the same call, management reaffirmed its credit cost guidance range of 1.3% to 1.7%, while expecting funding costs to rise following the September 2026 quarter results.