Ongoing festive season to drive Mahindra Finance's growth

Mumbai: Mahindra Finance, a part of the Mahindra group and one of India's leading non-banking finance companies (NBFCs) focused on rural and semi-urban sector, expects loan disbursement to be high this year compared to previous years.

The company anticipates volumes to pick up for auto loans, tractors, pre-owned vehicles. Mahindra Finance sees disbursements on growth trajectory while NPAs (non-performing assets) to have a declining trajectory.

Ramesh Iyer, vice-chairman and MD, Mahindra Finance, said: "We hope that there is no severe third wave and with a good monsoon, one could expect October to do well, especially as infrastructure work gathers pace. With both of that happening, it could be a good buoyant story from a rural perspective."

In August, the Mahindra Finance saw macro sentiments turning positive with normalcy returning. The disbursement during the month was at Rs 2,150 crore, up 57 per cent YoY over a smaller base of the year-ago period. The collection efficiency further improved to 97 per cent, up from 95 per cent in July and 90 per cent in June. The company expects the trend to be holding up, the sentiments are seen pretty positive, people are back on the streets performing their activity in most parts, we are witnessing bounce back of collections very clearly.

From company's point of view, it's important to capture three areas for further growth. "We have created a very strong SME (small and medium sized enterprises) vertical, where we are working with a large Mahindra ecosystem, and other OEM (original equipment manufacturer) ecosystem, where we will support suppliers for their capex or working capital requirements. We have chosen three industries to work with — auto, agriculture and engineering — where we think there is a lot of play for SME players," Iyer said.

Mahindra Finance in the vehicle segment sees pre-owned vehicles to be a good growth segment. As infrastructure opens up, tractor volumes are expected to pick up. Many OEMs in cars are also reaching out to rural markets with their launches and that can become a natural synergy for the company to gain volume. Mahindra Finance expects the leasing business in the next three years will become a prominent play. The company have set up a digital finco for small-ticket consumer durable and personal loans. Meanwhile, the company has launched 'Shubh Utsav', 2 months of special festive offers on vehicle loans.