Here's what to expect from Mahindra Finance Q1 earnings

Moneycontrol Bureau

Mahindra & Mahindra Finance, the non-banking finance company (NBFC), will announce its first quarter (April-June) earnings on Thursday. Its net profit is expected to grow by 27 percent year-on-year to Rs 205 crore. Net interest income or the difference between interests earned and paid out, may increase 32 percent y-o-y to Rs 646 crore, according to an average poll estimate by CNBC TV18.

"Investors mostly continue to bet on the company. Rural demand is likely to keep its growth engine rolling. Despite economic weakness, their asset under management is likely to expand outpacing industry credit growth," an analyst from a foreign brokerage firm told moneycontrol.com on conditions of anonymity.

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As on March 31; the company's outstanding loan book stood at more than Rs 24,000 crore compared with Rs 17,500 crore a year back. Mahindra Finance had reported 45 percent rise in its net profit to Rs 228 crore for the fourth quarter ending March 2012. The company is primarily known for its lending to tractor purchases.

Mahindra Finance, which were nurturing plans to apply for a new banking licence finally backed out after reviewing the final RBI guidelines. However, the market seems to have supported this decision.

"Had it applied for a banking licence, it would have to convert the existing NBFC set-up into a bank. In that case, it would have incurred huge cost for converting branches to banking units. The decision taken was in the right earnest," said an investor relation manager from a large domestic brokerage.

Since last one year M&M Finance shares surged 85 percent as against 17 percent rise in the 50-share Nifty, the broader index on NSE. 

saikat.das@network18online.com