Analyst Concall
M&M Fincl aims for 15% RoE with focus on each product
This story was originally published at 20:30 IST on 24 April 2026
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--M&M Fincl: Co continues to invest in distribution, underwriting
--M&M Fincl: See momentum in tractor business continuing in FY27
--M&M Fincl: Confident of maintaining credit cost at 1.3-1.7% FY27
--M&M Fincl: Made INR 2.17 bln provisions amid geopolitical, weather risks
--M&M Fincl: Want to achieve RoE of 15% going ahead
--M&M Fincl: May see stress in geographies with weak remittance flow amid war
--M&M Fincl: Aim to grow 16-18% over next 5 yrs
By Priyasmita Dutta, Gunjan Rajput, and Shakshi Jain
NEW DELHI – Mahindra & Mahindra Financial Services Ltd. plans to achieve a return on equity of 15% over the medium term, while focusing on the growth of its business in each of its products, the financier's management said Friday. "...While the group chases an 18% RoE, our first stop would be to get to 15%," the management said in a post-earnings analyst call. "...we have been trending in that direction."
The vehicle financier's return on equity at the end of the March quarter was 12.5%, higher than 12.4% end of 2024-25 (Apr-Mar), and 10% end of FY24.
In terms of business, the company aims to grow its business by 16-18% over the next five years, the management said. At the end of March, the company's assets under management rose 12% on year to INR 1.34 trillion. Disbursements during FY26 rose 6% on year to INR 611.18 billion for the quarter, despite geopolitical headwinds, as demand remained positive following goods and services tax cuts. In the March quarter alone, disbursements totalled INR 171.84 billion, up 11% on year.
Within its product mix, during Jan-Mar, the tractor business grew at the highest pace of 63% on year to INR 20.34 billion. "When you look at the sectors for growth where we are, we are very dominant in the tractor business. We see that momentum continuing into this year (FY27)," the management said.
Financial results released earlier in the day showed the lender reported a sharp year-on-year rise in its net profit for the March quarter on the back of healthy net interest income. The net profit rose 55% on year and around 8% sequentially to INR 8.73 billion for the March quarter. Shares of the company on Friday ended at INR 294.30 on the National Stock Exchange, down nearly 1% from the previous close.
In FY27, the company will focus on growing in vehicle, mortgages, small borrowers, and leasing segments, while also focusing on fee income. According to the management, to build on these, the company will continue to invest in distribution, underwriting and collection teams.
It also plans to maintain steady progress in overall growth and margins in FY27, keeping in mind asset quality and credit cost risks. "We have always said that our business model factors a credit cost of 1.3 to 1.7%. We are confident to stay within that," the management said. Credit cost for FY26 was 1.7%, higher than 1.3% in FY25.
Flagging some of the risks, the financier's management said that the West Asia crisis has created remittance flow problems in some states, which may lead to temporary stress. "So whenever geographies like Kerala depend a lot on remittance-based income, there could be some temporary stress there," the management said. "But we do have ways of overmanaging some of that through collection and more intense engagement with customers in overcoming some of that (stress)," they added.
Keeping in mind potential risks from the West Asia war and weather-related shocks, the management also said that the company made additional provisions of INR 2.17 billion during the March quarter, which will help combat some of the risks that may pop up in the future. "That overlay (INR 2.17 billion provision) is not a random number. It has been very well thought through for different customer segments, risk profiles, and learnings from the past," the management said. It is helping "to be well-calibrated on the ability to create a cushion to address if things go south." End
Edited by Akul Nishant Akhoury
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