MAHINDRAANDMAHINDRAFINAN Q2 FY26 earnings call.
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Revenue
Pending
verification pending
Revenue YoY
13%
reported change
EBITDA
Pending
latest reported figure
Source
bse pending
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Mahindra Finance delivered a decent Q2 with AUM growth of 13% and income growth of 14% YoY, aided by festive momentum post-GST announcements. NIM expanded from 6.5% to 7% YoY driven by cost of funds improvement (30bps) and fee-based income now at 4% of average assets. Asset quality remained rangebound with GS3+GS2 at 9.72%, a significant improvement from Q1 where the usual Q2 seasonal climb was contained to just 9bps versus 60bps last year—credit cost stood at 2.2% with PCR at 53%. Tractor disbursements surged 41% YoY while PV and used vehicles grew modestly at 1% and 4% respectively, with trade advances of ₹6,800 crore supporting dealer inventory. Management maintained full-year credit cost guidance at 1.7%, expecting H2 volume tailwinds from GST benefits to drive 12% PV and 15% tractor segment growth. Rural Housing Finance subsidiary completed an ARC transaction, reducing GS3 below 3% and achieving profitability. Risks include limited further cost of funds benefit as capital gets deployed, persistent CV weakness, and potential used vehicle price pressure from new car discounts.
Colored figures show movement against the previous available record.
Guidance to track
- Management reiterated full-year credit cost guidance of 1.7%, citing manageable GS2/GS3 stock and PCR cover of 53%, expecting better execution in H2 despite 2.2% in Q2.
- Management expects passenger vehicle industry volume growth of 12% in H2 (vs 4% in H1) due to GST-driven demand, with full-year blended growth of ~8% benefiting Mahindra Finance's 40% PV book.
- Tractor industry expected to grow 15% YoY for full year with H2 at 18-20% growth (vs 10% H1), supporting Mahindra Finance's strong tractor franchise.
- Management stated intent to reach at least 15% steady-state disbursement growth through current segments (PV, tractor, used vehicles) and accelerate housing finance, up from current lower growth rates.
Risks flagged
- Cost of funds improved 30bps in Q2 aided by favorable rate environment and lower leverage post-rights issue. As disbursements grow and capital gets deployed, incremental NIM benefit will be limited.
- Unlike PV and tractor, commercial vehicle segment has not shown the same festive-season pickup. Management explicitly stated they 'don't share the same enthusiasm' for CV recovery.
- Annual ECL model refresh in Q3 will recalibrate LGD assumptions based on 42-month performance of March 2022 cohort. Analyst raised concern that higher GS3 stock could result in elevated credit cost—management deflected by saying they won't speculate on outcomes.
- Price cuts on new vehicles following GST reductions could compress used vehicle valuations, impacting collateral values and potentially increasing loss severities on the 18% used vehicle book.
Key quotes
- Q2 has seen a very positive momentum to seven [NIM] aided by both cost of funds and some income level enhancements.
- The controllable variables which is GS2 GS3 has been ranged out. On balance I would believe it's a decent quarter, positive recovery on margins, asset quality kept rangebound.
- I don't see a hazard to the 1.7 cap in credit cost right now sitting here annually.
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