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Why did Mahindra Finance shares touch new 52-week high?

Against the backdrop of a positive macro environment, Mahindra Finance continued its strong momentum in disbursements in November month. Premium
Against the backdrop of a positive macro environment, Mahindra Finance continued its strong momentum in disbursements in November month.

  • In November month, Mahindra Finance continued its momentum with the disbursement of approximately 4,500 crore -- recording a growth of a whopping 75% yoy. Year-to-date, the company's disbursement is around 31,050 crore rising by a massive 99% yoy.

Mahindra Group's financial services provider, Mahindra Finance on Monday touched a new 52-week high on exchanges after its monthly performance data. Against the backdrop of a positive macro environment, Mahindra Finance continued its strong momentum in disbursements in November month. Investors cheered Mahindra Finance stock to the point it rose by more than 6% so far in the day. Currently, the stock traded near its fresh 1-year high.

At around 1.48 pm, Mahindra Finance shares traded at 241.65 apiece up by 5.5% on BSE. The stock has touched a new 52-week high of 243.60 apiece.

At the current market price, the company's market cap is nearly 29,869 crore.

Due to the current bull run, Mahindra Finance shares have skyrocketed by at least 60% year-to-date. While in a year, the shares have zoomed more than 52% on Dalal Street. The shares were around 160 levels on December 6 last year.

In November month, Mahindra Finance continued its momentum with the disbursement of approximately 4,500 crore -- recording a growth of a whopping 75% yoy. Year-to-date, the company's disbursement is around 31,050 crore rising by a massive 99% yoy. The performance came amidst the backdrop of a positive macro environment.

Further, healthy disbursement trends led to a robust gross asset book to the tune of 76,300 crore in November --- growing 3.4% over September 2022. This has resulted in a growth of 17.5% versus March 2022.

Also, the collection efficiency (CE) was at 96% for November 2022, against CE of 94% in the same month last year.

By end of November month, the company's stage 2 assets garnered a sequential reduction compared to October 2022 and is estimated below 9%, While Stage 3 assets remained stable at lower than 7% as at month end.

Mahindra Finance expects further improvement in Stage 2 and Stage 3 assets during December 2022.

In its regulatory filing, Mahindra Finance highlighted that gross non-performing assets (GNPA) (as per Income Recognition, Asset Classification, and Provisioning norms) is estimated to be higher than Stage 3 asset by ~ 1200 crore, reconfirming the management beliefs that no additional provisions may be required over and above the Expected Credit Loss (ECL) provision for FY23.

Lastly, Mahindra Finance continued to enjoy a comfortable liquidity position on its Balance Sheet, with a liquidity chest of over 4 months.

During Q2FY23, Mahindra Finance's standalone net profit dropped by 56.17% to 448.33 crore as against 1,022.90 crore in the same quarter last year. However, Q2 PAT skyrocketed by 101.11% from a profit of 222.92 crore in the June 2022 quarter. Meanwhile, in Q2FY23, its net interest income stood at 1,540 crore up by 2% yoy with a healthy net margin of 7.5%. The company's loan book increased by 9% to 73,817 crore compared to Q1FY23 aided by an increase in disbursements. Disbursement for the quarter at 11,824 crore was up 83% on yoy basis.

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