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Infra Revival, Bumper Crop Season To Drive New Vehicle Sales: M&M Financial

But demand for heavy commercial vehicles may take longer to recover as compared to car or tractor sales, M&M Financial’s MD says.

A farmer drives a tractor past a billboard advertisement for the Bharatiya Janta Party (BJP) picturing Indian Prime Minister Narendra Modi, left, in Modinagar, Uttar Pradesh, India. (Photographer: Anindito Mukherjee/Bloomberg)
A farmer drives a tractor past a billboard advertisement for the Bharatiya Janta Party (BJP) picturing Indian Prime Minister Narendra Modi, left, in Modinagar, Uttar Pradesh, India. (Photographer: Anindito Mukherjee/Bloomberg)

A bumper harvest season and state-level infrastructure push is expected to drive sales of new automobiles and tractors, according to Mahindra & Mahindra Financial Services Ltd.’s Managing Director and Vice Chairman Ramesh Iyer.

“We expect the next crop season to be very positive as the water levels are good,” Iyer told BloombergQuint in an interview. “We also expect the infrastructure story will open up at different state levels on a quarter-on-quarter basis to trigger a lot of demand.”

Iyer, however, said demand for heavy commercial vehicles may take a longer time to recover as compared to car or tractor sales. The non-banking lender said the festive season and deep discounts at dealerships to bring down inventory levels led to a 31 percent sequential growth in loan disbursements.

The managing director’s comments came a day after the NBFC arm of Mahindra Group reported its December quarter results. The company’s net profit rose 14.6 percent year-on-year to Rs 365.28 crore in the third quarter of 2019-20 on the back of net interest income that increased 12.5 percent to Rs 1,333 crore.

M&M Financial Services Q3 Results: Key Highlights (YoY)

  • Net interest income rose 12.5 percent to Rs 1,333 crore
  • Profit after tax rose 14.6 percent to Rs 365.28 crore
  • Standalone AUM up 16 percent, crosses Rs 75,000 crore mark.
  • Disbursements up 31 percent to Rs 12,780 crore
  • Gross NPAs at 8.5 percent versus 7.9 percent. (QoQ)
  • Net NPAs at 6.7 percent versus 6.4 percent. (QoQ)

Gross bad loans restated as a percentage of business assets versus total assets earlier.

Shares of the non-banking lender rose 8.2 percent to a six-month high of Rs 380 apiece compared to a 0.70 percent gain in the Nifty Index.

Watch| M&M Financial Does Not Expect Borrowing Costs To Rise In The Near Term