Mahindra & Mahindra Financial Services on July 22 reported a consolidated net profit of Rs 529 crore for Q1 FY26, up 6 percent from Rs 497 crore in the same quarter last year.
The modest increase in bottom line came despite strong growth in income and assets, as the company battled higher provisioning requirements and rising credit costs, the regulatory filing said.
The company’s total consolidated income rose sharply to Rs 5,013 crore in Q1 FY26, marking a 15 percent year-on-year increase from Rs 4,355 crore in Q1 FY25. This was driven by a 2 percent growth in disbursements, which touched Rs 13,623 crore during the quarter.
Consolidated pre-provisioning operating profit (PPOP) rose 15 percent to Rs 1,379 crore, compared to Rs 1,197 crore a year earlier.
On a standalone basis, Mahindra Finance reported a net profit of Rs 530 crore in Q1 FY26, up 3 percent from Rs 513 crore in the year-ago quarter.
Total income rose to Rs 4,438 crore, an 18 percent increase from Rs 3,760 crore in Q1 FY25.
Disbursements remained flat year-on-year at Rs 12,808 crore versus Rs 12,741 crore.
Growth in disbursements was led by the tractor and passenger vehicle segments, which grew 21 percent and 2 percent respectively, while commercial vehicles and SME disbursements declined 12 percent and 19 percent respectively.
The company’s assets under management (AUM), referred to as business assets, grew 15 percent year-on-year to Rs 1,22,008 crore from Rs 1,06,339 crore in Q1 FY25.
Net interest income (NII) increased by 20 percent to Rs 2,267 crore, up from Rs 1,894 crore a year earlier. However, credit costs rose significantly to 1.9 percent of average total assets compared to 1.5 percent in Q1 FY25.
Operating expenses increased 17 percent year-on-year to Rs 932 crore. This included employee benefit expenses of Rs 523 crore and other overheads of Rs 334 crore.
As a result, the cost-to-income ratio stood at 40.8 percent, slightly lower than the 41.3 percent recorded in Q1 FY25.
Gross Stage 3 assets as a percentage of business assets stood at 3.85 percent at the end of Q1 FY26, compared to 3.56 percent in the previous year. Net Stage 3 assets also rose to 1.91 percent from 1.46 percent. Despite the rise, the company’s provision coverage ratio on Stage 3 assets declined to 51.4 percent from 59.8 percent in Q1 FY25.
The return on average net worth (RONW) for the quarter was 9.8 percent, down from 11.1 percent in the same period last year. Return on assets (ROA) also dropped slightly to 1.6 percent compared to 1.8 percent in Q1 FY25. Earnings per share (basic) for the quarter stood at Rs 4.07, marginally up from Rs 4.03 a year ago.
As of today, Mahindra & Mahindra Financial Services closed at Rs 262.50 on the NSE.
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