Mahindra & Mahindra Financial Services shares slump 14.40% on weak Q2FY24 performance
Mahindra & Mahindra Financial Services, (MMFS), part of the Mahindra Group, slumped 14.40% to reach 237.35 apiece in early trade on Monday, a level not seen since April 2023, as the investors reacted negatively to the company's Q2FY24 performance, which was released post-market hours on Friday. At 10:45 AM, the stock was trading with a drop of 9.45% at ₹251.30.
The company reported a 48% drop in its standalone net profit to ₹235 crore in Q2FY24, led by provision reversals. In comparison, during the same period of last year, the company reported a PAT of ₹448 crore, and in the preceding June quarter (Q1FY24), the PAT stood at ₹362 crore.
In Q2FY24, the company's net interest income reached ₹1,674 crore, marking a 9% YoY growth, while it reported a PPoP (pre-provision operating profit) of ₹942.8 crore, reflecting a 9.2% YoY rise. During the quarter, yields moderated at 35 basis points QoQ, while CoF jumped 10 basis points, leading to a NIM contraction of 45 basis points QoQ.
"Yield moderation was attributed to a rising proportion of PrimeX customers, stronger growth in lower-yielding utility vehicles, and no interest rate hike on incremental lending," said domestic brokerage firm Motilal Oswal. "NIMs compression due to rising CoB is a wide narrative however, Mahindra Finance faced twin challenges: yield compression (upgrade to a better customer segment and a high proportion of interest-free advances this quarter) and rising CoB," said brokerage firm Centrum Broking. According to Centrum Broking, the company experienced increased credit costs in the second quarter, primarily due to rise in provisions and write-offs resulting from challenges in the tractor segment caused by erratic monsoon. RIL share price rises 2% after Q2
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