Mahindra & Mahindra Financial Services said CRISIL Ratings has reaffirmed its ratings on the company’s debt programs and banking facilities at “CRISIL AA+/FAAA/Stable/CRISIL A1+”.

CRISIL said the ratings reflect the company’s majority ownership and its strategic importance to parent company, Mahindra & Mahindra (M&M).

The ratings are also supported by a strong position in the commercial vehicle (CV) and tractor finance business in rural and semi-urban areas, adequate capitalization and a stable resource profile. These strengths are partly offset by the modest quality of the assets.

Mahindra Finance’s asset quality deteriorated in the first quarter of FY22 due to the outbreak of the second wave of the pandemic, but improved thereafter as economic activities resumed. Stage 3 gross assets are improving and stood at 7.66% as of March 31, 2022 compared to 8.96% as of March 31, 2021.

Under the August 2020 and May 2021 RBI Resolution Framework for COVID-19 Related Stress, the company implemented restructuring on accounts amounting to Rs 4,019 Crore (6.2% of portfolio) as of March 31, 2022; the performance of this portfolio remains to be seen.

Mahindra Finance’s ability to manage collections and asset quality in the current environment will remain a controllable key.

The impact of the revised RBI standards on asset classification under the circular issued on November 12, 2021 and extended to September 30, 2022 in accordance with the RBI circular of February 15, 2022 remains to be seen.

Mahindra & Mahindra Financial Services (Mahindra Finance) is a Non-Banking Finance Company (NBFC). M&M, the majority shareholder, owned 52.2% of Mahindra Finance as of March 31, 2022. Mahindra Finance ranks among the largest NBFCs in India with gross loan assets of Rs 64,961 crore as of March 31, 2022. The company finances consumer purchases of UV, LCV, tractors, cars and other assets.

The company’s net profit jumped to Rs 601 crore in Q4 FY22 from Rs 150 crore in Q4 FY21. Total revenue decreased by 6.5% to Rs 2,466.36 crore in the fourth quarter of FY22 from Rs 2,637.51 crore in the fourth quarter of FY21.

The certificate lost 0.20% to end at Rs 171.15 on BSE yesterday.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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