Mahindra & Mahindra Financial Services Ltd. Reports 9.5% Decline in Net Profit for March Quarter

Mahindra & Mahindra Financial Services Ltd. (M&M Finance) has reported a net profit of ₹619 crore for the March quarter, marking a 9.5% decline compared to the same period last year. Despite this decrease, the company’s net interest income for the quarter saw a significant increase of 21% year-on-year, standing at ₹3,706.10 crore.

In addition to its financial results, M&M Finance has recommended a dividend of ₹6.30 per equity share for the financial year 2024, resulting in a total payout of 315%. However, this dividend payout is subject to approval at the company’s forthcoming 34th Annual General Meeting.

The company’s earnings report was delayed due to a fraud incident at one of its branches in the North East region, involving an amount of ₹135.86 crore. This fraud has impacted the company’s profits for the quarter and the fiscal year ended March 31, 2024. M&M Finance’s parent company has appointed a law firm and an accounting firm to investigate the irregularities and identify potentially fraudulent loan accounts.

The fraud primarily involved retail vehicle loans disbursed by the company and included forgery of KYC documents, leading to the misappropriation of company funds. Several individuals, including an area business manager and other branch employees, have been arrested in connection with the fraud.

Despite these challenges, shares of Mahindra & Mahindra Finance closed 0.57% higher at ₹266.20 apiece on Friday. The stock has shown modest growth over the past 12 months, gaining around 7%, although it has underperformed compared to its industry peers. The company continues to address the fallout from the fraud incident and work towards maintaining its financial stability and investor confidence.