Mahindra Finance Kicks Off FY26: Strong Collection, Asset Growth

Hey there, finance folks! 👋 Mahindra & Mahindra Financial Services (M&MFIN), a key player in India’s rural and semi-urban financing landscape, just shared its business updates for the first quarter of Fiscal Year 2026 (Q1 FY26). Let’s dive into what these numbers tell us about the company’s health.

Disbursement & Business Assets: The Growth Story

The company reported overall disbursements of approximately Rs. 12,800 crore in Q1 FY26. While this marks a modest ~1% year-on-year (YoY) growth, excluding finance lease, it shows continued activity in new loan origination. More impressively, Mahindra Finance’s total business assets surged to approximately Rs. 1,21,800 crore, growing by a healthy ~15% compared to June 2024. This growth in assets highlights the expansion of its loan book and overall business scale.

Collection Efficiency: A Positive Trend

One of the critical metrics for any financial services company, especially one focused on diverse geographies, is its Collection Efficiency (CE). We’re seeing good news here! M&MFIN’s CE is estimated at 95% for Q1 FY26, a nice improvement from 94% in Q1 FY25. This upward trend in collections is a strong indicator of healthier cash flows and better recovery from borrowers.

Asset Quality: A Closer Look at Stage-2 & Stage-3

Now, let’s talk about asset quality – a crucial aspect. Financial institutions classify their loans into different stages based on credit risk. Stage-3 assets are essentially non-performing assets (NPAs), meaning loans where payments are significantly overdue. Stage-2 assets indicate loans with an increased credit risk but are not yet classified as NPAs.

As of June 30, 2025:

• Stage-3 assets are estimated to be in the range of 3.8% to 3.9%. This is a slight uptick from 3.7% as of March 31, 2025, and 3.6% as of June 30, 2024.
• Stage-2 assets are estimated to be between 5.8% to 5.9%. This compares to 5.4% as of March 31, 2025, and 6.1% as of June 30, 2024.

While the slight increase in Stage-3 assets warrants attention, the overall asset quality metrics are within a manageable range for a company operating in diverse lending segments, including agriculture and vehicles. The sequential change in Stage-2 also suggests some dynamic shifts in early-stage stress.

Strong Liquidity Position

Mahindra Finance continues to maintain a robust liquidity position, boasting a liquidity chest of over Rs. 9,600 crore. This comfortable liquidity acts as a cushion, allowing the company to meet its financial obligations and seize growth opportunities without stress.

What It Means for M&MFIN

Mahindra Finance has started FY26 with a mixed but largely positive report card. The strong collection efficiency and significant growth in business assets are encouraging signs of operational strength. While the modest increase in stressed assets (Stage-3) is a point to monitor, the company’s ample liquidity provides stability. It’s clear that M&MFIN is navigating the market with a focus on both growth and prudent financial management. 📈

source: Corporate Announcement

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