M&MFIN Q2 FY27 Earnings Call Transcript Released

Mahindra & Mahindra Financial Services Limited (M&MFIN) has released the transcript of its Earnings Conference Call for the second quarter and half year ended September 30, 2026. The call was held on October 21, 2026.

During the call, management expressed encouragement with the Q2 results, highlighting a steady performance in growth, margin, and risk. Disbursement growth stood at 22%, driven by the core wheels business and diversification into SME and mortgage segments. Asset quality showed improvement with GS2+GS3 at 8.1%, considered near all-time lows, and credit costs were within the guided range of 1.3% to 1.7% at 1.6% for Q2.

The company reported a Profit After Tax (PAT) growth of 55% at ₹882 crore. The lending AUM reached ₹1,56,000 crore, with non-wheels business contributing 20% and growing at 52%, while the core wheels business grew by 21%. The company also noted steady growth from its subsidiaries, with MRHFL posting a PAT of ₹35 crore.

Management discussed the holistic and secular growth across all asset categories, including passenger vehicles, used vehicles, commercial vehicles, tractors, three-wheelers, and SME. They emphasized a turning corner in terms of inter-quarter volatility for GS2+GS3 numbers and credit costs, attributing this to improved underwriting, risk guardrails, and collection discipline. Capital adequacy remained strong at 18% with a Tier 1 ratio of 16.2%.

The company is focusing on improving its Return on Assets (ROA) to the aspirational range of 2.2% to 2.5%. While ROA sequentially fell in Q2 due to factors like liquidity buffers and high trade advances (which are seasonal), management expects it to rebound. For the first half of FY27, the ROA was 2.3% with a 68% PAT growth.

AI toolkits are being integrated to enhance efficiency, focusing on revenue increase, operations, and collections. 75% of back-office operations are now covered by AI-enabled workflows, and AI calling is improving call center efficiencies.

Key priorities for the franchise include defending the core business, growing diversification in mortgage, SME, and leasing, maintaining margins, ensuring stable risk, and adopting a resilient operating model with new-age toolkits. The cost-to-income ratio has improved to under 37% from above 40%.

Management acknowledged potential headwinds from a new consultation paper on insurance and drought-related scenarios in certain states, but expressed confidence in navigating these challenges. They reiterated their medium to long-term AUM growth target of 16% to 18%, emphasizing risk and price-adjusted growth.

Regarding cost of funds, the company is cognizant of the rate hike environment and is leveraging priority sector lending assets for offloading through co-lending and securitization. While a majority of the book is fixed, the non-wheels business has floating rates, and incremental assets will be booked at higher rates. The liquidity buffer is dynamic and will be adjusted based on the environment.

In terms of asset quality, proactive measures include augmenting collections in drought-prone districts and reducing funding in stressed locations. The company maintains a fair but firm collection philosophy, being accommodative to customers in genuine distress.

The company is scaling its mortgage business, integrating its housing finance subsidiary into the parent NBFC to participate in affordable housing, LAP, and prime housing segments, leveraging its existing branch network.

Co-lending arrangements are currently paused due to regulatory changes but may be revisited if systems can be seamlessly integrated.