M&MFIN - Mahindra & Mahindra Financial Services Limited Share Price

Question 1: Mahrukh Adajania: "After the ECL model annual reset, do you expect credit costs to hold at current levels of 1.3% over the next few quarters? Can you also highlight any significant changes in the ECL model?"

Answer: I mentioned that our credit cost should sustain between 1.5% to 1.7%. Currently, we're at 1.8%, so we remain confident. We aim to keep GS2 and GS3 balanced. Regarding ECL changes, we refined our model to be more representative, moving from a 42-month to a broader historical LGD calculation, aligning with industry practices. This should accurately reflect our asset quality.

Question 2: Abhijit Tibrewal: "Is the momentum we witnessed after the GST cut sustainable going into Q1?"

Answer: The GST cut did boost demand in Q3, particularly for tractors. However, after the festive season, demand has softened somewhat, with rural segments performing better. While Q1 may not match Q3's growth, we expect stability, driven by rural demand. We intend to maintain or improve our market share across segments, adjusting strategies accordingly.

Question 3: Shreya Shivani: "What explains the disparity in industry volume growth versus our CV, CE disbursal growth this quarter?"

Answer: Our conservative approach focuses on profitable segments, addressing fleet market consolidation effects. While we've maintained unit growth, ticket sizes have rationalized post-GST, affecting disbursements. We are targeting retail over larger fleet operators and balancing risk versus growth in this sector, avoiding aggressive expansion amidst market volatility.

Question 4: Nidhesh: "From a medium-term perspective, what are your loan growth aspirations and expected loan book mix changes?"

Answer: We aim for mid-teens CAGR growth, leveraging both wheels and new segments like mortgages and SME. By FY'30, we want to reduce our wheels business share from 88% to 70%. Diversifying will stabilize growth and mitigate risks associated with being predominantly wheels-focused. The new segments should contribute positively over time.

Question 5: Viral Shah: "With the ECL refresh and overlays, how do you approach seasonality in credit costs?"

Answer: While management overlays exist, we won't use them to smooth earnings. Our focus is on maintaining GS2 and GS3, ensuring their stability. Credit costs should be driven by our operational performance rather than accounting adjustments. We plan to uphold these metrics actively, seeking consistent performance instead of volatility.