M&M Financial Posts Steady Q3 Performance With Higher Disbursements and Asset Growth
Mahindra & Mahindra Financial Services delivered a stable operational performance in the December quarter of FY26, reporting healthy growth in disbursements and assets while maintaining asset quality and liquidity comfort. The non-banking financial company (NBFC) said it estimates disbursements of around ₹17,600 crore for the quarter ended December 31, 2025, marking a 7% year-on-year increase.
The update, released on January 3, signals that demand for retail and rural-focused credit remains resilient despite broader concerns around interest rates and consumption trends. Investors are closely tracking such business updates as early indicators ahead of detailed earnings announcements.
Assets Under Management Rise 12% as Lending Momentum Continues
M&M Financial said its business assets grew approximately 12% year-on-year to nearly ₹1.29 lakh crore as of December 31, 2025. The growth reflects steady loan book expansion across key segments, supported by improving collections and disciplined underwriting.
On a cumulative basis, disbursements for the nine months ended December are estimated at ₹43,900 crore, up 4% year-on-year, excluding finance leases. While the growth for the nine-month period is relatively moderate, management commentary suggests a gradual pickup in demand during the second half of the year.
A market analyst tracking NBFCs said, “The 12% asset growth shows that M&M Financial is expanding at a measured pace, prioritising portfolio quality over aggressive growth.”
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Asset Quality Remains Largely Stable in the December Quarter
A key comfort point for investors was the stability in asset quality metrics. The company said collection efficiency during the quarter is estimated at 95%, unchanged from the same period last year, indicating consistency in borrower repayments.
Stage-3 assets, which broadly represent non-performing loans, are estimated in the range of 3.9% to 4.0% as of December-end. This compares with 3.9% as of September 30, 2025, suggesting no material deterioration quarter-on-quarter despite macro uncertainties.
Early Delinquencies Improve, Signalling Portfolio Resilience
Encouragingly, early stress indicators showed improvement. Stage-2 assets are estimated at 5.4–5.5% as of December 31, down from 5.8% in the September quarter and 6.3% a year earlier.
This sequential and annual decline in Stage-2 assets points to better repayment behaviour among borrowers and early signs of stress resolution. Analysts often view this metric as a leading indicator of future asset quality trends.
According to an industry expert, “Improvement in Stage-2 assets is a positive signal. It reduces the probability of slippages into Stage-3 and supports earnings stability over the medium term.”
Liquidity Position Remains Comfortable With Strong Buffer
M&M Financial also highlighted its strong liquidity position. As of December 31, the company reported a liquidity buffer of over ₹8,850 crore on its balance sheet, providing ample headroom to meet obligations and fund incremental growth.
In the current environment, where funding costs and market access remain key risks for NBFCs, a strong liquidity buffer is viewed as a critical strength. It not only enhances balance sheet resilience but also allows flexibility in managing growth opportunities.
Key takeaways on liquidity include:
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Liquidity buffer exceeding ₹8,850 crore
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Adequate coverage for near-term liabilities
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Flexibility to support loan growth without stress
Stock Reaction Muted Ahead of Detailed Results
Despite the steady operational update, shares of M&M Financial ended 0.61% lower at ₹401.70 on Friday, ahead of the announcement. Market participants said the muted reaction likely reflects cautious sentiment and a wait-and-watch approach until full financial results are released.
Short-term stock movements aside, investors appear more focused on asset quality trends, margins and credit costs, which will be clearer once the company reports its detailed December-quarter numbers.
What Investors Should Watch Going Forward
As M&M Financial prepares to announce its full Q3 FY26 results, several factors will be closely monitored:
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Net interest margins amid funding cost pressures
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Credit costs and provisioning trends
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Sustainability of asset quality improvements
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Growth outlook for the remainder of FY26
The company’s rural and semi-urban focus makes it particularly sensitive to monsoon patterns, farm incomes and broader consumption trends, all of which will shape performance in coming quarters.
A Measured Growth Story With Focus on Stability
Overall, M&M Financial’s Q3 business update paints a picture of measured growth backed by improving portfolio metrics and strong liquidity. While growth is not aggressive, the emphasis on asset quality and balance sheet strength positions the NBFC well in a cautious credit environment.
As one investor summed it up, “This update is less about excitement and more about reassurance. Stability is the story, and that matters in this cycle.”
For long-term investors, the December-quarter update reinforces M&M Financial’s focus on sustainable expansion, setting the stage for a clearer assessment when the detailed financial results are unveiled.
