M&M Financial down 8% as NBFC defers Q4 results amid ‘fraud’ at Northeast branch

Shares of non-banking financial company (NBFC) Mahindra & Mahindra Financial Services Ltd plunged as low as 8.5% today after the company deferred its Q4 FY24 (January-March) quarter earnings amid a fraud detected at one of its branches in the northeast. The company says the financial impact of this fraud is unlikely to exceed ₹150 crore.

Mahindra & Mahindra Financial Services, in an exchange filing, says: "During the end of 4th quarter of the financial year ended 31st March 2024, a fraud was detected at one of the company’s branches in the North East."

The fraud involved the forgery of KYC documents, leading to the embezzlement of funds in respect of retail vehicle loans disbursed by the company.

Mahindra & Mahindra Financial says the investigations in the matter are at an "advanced" stage. "Investigations are underway, and necessary corrective actions have been identified and are at various stages of implementation, including the arrest of few persons involved."

Amid the development, M&M Financial says the agenda matters pertaining to approval of the audited standalone and consolidated financial results of the company for the fourth quarter and financial year ended 31st March 2024, recommendation of dividend, AGM and related matters are being deferred to a later date.

Shares of M&M Financial are currently trading at ₹267.15, down 3.73% on the BSE. The stock is trading around 22.8% lower than the 52-week high of ₹346.40 touched on July 4, 2023. At the current share price, the company's m-cap stands at ₹33,068.96 crore.

The share has underperformed in the past year, rising just 4.31%. In the calendar year, the share fell 3.27%. On a six-month, one-month and past-week basis, the scrip has fallen 2.38%, 2.67%, and 8.92%, respectively.

Mahindra & Mahindra Financial's Q3 FY24 PAT declined 12% YoY and grew 135% QoQ to ₹550 crore, while its M9 FY24 PAT declined 12% YoY to ₹1,140 crore. The total net income (as % of assets) improved to 6.8%, while NIM as of 9M FY24 stood at 6.7%.

Mahindra & Mahindra Financial in February 2024 had announced a strategic collaboration to build a “super app” that would serve as a single digital interface for consumers to access multiple businesses within Mahindra Finance. This app will enable consumers from both metros and non-metros to have 24x7 digital access to avail and manage products & solutions.

In its guidance, the company says its FY25 disbursements will not be as "buoyant" as in FY24 and expects FY25 disbursements to be tempered vs FY24.

Mahindra & Mahindra Financial, a part of the Mahindra Group, focuses on the rural and semi-urban sectors. The company has over 9.8 million customers with an AUM of over $11 billion. The company provides loans to SMEs and also offers fixed deposits.