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Informist, Tuesday, Oct. 22, 2024

By Pratiksha and Sachi Pandey

NEW DELHI/MUMBAI – Mahindra & Mahindra Financial Services Ltd. expects an improvement in the tractor segment in October, with loans in the segment seen rising as demand improves. "Tractor has seen an H1 (Apr-Sept 2024) to H1 (Apr-Sept 2023) degrowth, but the commentary now is this H2 (Oct-Mar) because of the first 15 days of October itself we have seen a very strong uptick, and we just hope that we'll also be able to ride some of the tailwind of that demand which is coming now, because overall it has been a good year in terms of monsoons. We just hope that these late monsoons don't disrupt the party," the company said in its post-earning call on Tuesday.

The company's management is positive on rural and agrarian outcomes for the rest of the current financial year and expects tractors to have a good patch. As per the company's financial results announced Tuesday, disbursements for tractors in the first half of 2024-25 (Apr-Mar) was INR 26.55 billion, down 3% from INR 27.36 billion in the corresponding period last year.

Looking ahead, the company acknowledged that its growth trajectory in the vehicle financing sector over the next few years will largely mirror the underlying market trends. While it does not anticipate aggressive growth, the company is aiming to protect its market share and explore opportunities in certain areas, including used cars and tractors, as well as new commercial vehicle segments. The overall outlook for passenger vehicles, however, is tepid, with disbursements seen flat for the rest of the financial year.

"For the vehicle businesses, we will have a certain growth trajectory for the next three years. PV (passenger vehicle), CV (commercial vehicle), I don't think we will have very steeper acquisition compared to the rest of the pack. We will protect our market shares and maybe in some segments....we will try to increase our overall participation," the company said.

Mahindra & Mahindra Financial Services' overall disbursements fell 1% on year to INR 131.60 billion in the quarter ended September as the bottom line of INR 3.69 billion missed analysts' expectations of INR 4.65 billion. Disbursements for passenger vehicles, the non-banking financial company's largest asset class, were 3% lower in Jul-Sept compared to the same period last year. Commercial vehicle and construction equipment, the second-largest segment, witnessed an even larger decline of 10% in disbursals. For Apr-Sept, passenger vehicle disbursements were flat compared to last year, while that for commercial vehicle and construction equipment were 1% lower.

Despite facing challenges, the company expressed confidence in its ability to manage growth in a sustainable and profitable manner. It also emphasised the strength of its leadership team in navigating both growth and risk management in the current environment.  End

Edited by Saji George Titus and Tanima Banerjee

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