Mahindra & Mahindra Financial Services Limited (MMFSL), one of India's leading non-banking financial companies (NBFCs) and part of the Mahindra Group, has announced a significant fundraising initiative through a rights issue. The Board of Directors, in its meeting held on February 13, 2025, approved the issuance of fully paid-up equity shares worth up to INR 3,000 crore to eligible shareholders.

Purpose and Strategic Importance

The decision to raise INR 3,000 crore aligns with Mahindra Finance's strategic objective of strengthening its capital adequacy ratio while supporting its growing Assets Under Management (AUM). Over the past 21 months, the company has reported an AUM CAGR of 21%, showcasing a robust financial trajectory.

Maintaining Asset Quality and Growth

MMFSL has consistently focused on maintaining asset quality, as reflected in its gross stage 3 (GS3) ratio staying below 4% throughout FY25. The company also kept credit costs below 2%, underscoring its prudent risk management strategies. With India’s domestic consumption continuing to expand, Mahindra Finance sees tremendous growth opportunities, particularly in rural and semi-urban markets.

Rights Issue Details

The board has entrusted its Rights Issue Committee with key responsibilities, including:

• Appointment of necessary intermediaries

• Determination of issue price

• Rights entitlement ratio

• Record date for eligible shareholders

• Timing and terms of payment

The specific terms of the rights issue will be announced in due course, subject to necessary regulatory approvals in compliance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Strengthening Financial Position

As an AAA-rated NBFC, MMFSL has a well-diversified product portfolio, serving over 10 million customers and managing an AUM exceeding USD 13.7 billion. The capital infusion will further enhance Tier 1 capital by more than 200 basis points, ensuring a stronger financial position to capitalize on future opportunities.

About Mahindra Finance

Mahindra & Mahindra Financial Services Limited (MMFSL) specializes in providing financial services tailored for India's rural and semi-urban markets. The company has a nationwide presence, reaching over 4,80,000 villages and 8,000 towns with 1,375 offices. It primarily focuses on vehicle and tractor financing, SME lending, and fixed deposit offerings.

The Mahindra Group Legacy

Founded in 1945, the Mahindra Group is one of India’s largest multinational federations, with operations spanning over 100 countries. The group leads in farm equipment, utility vehicles, IT, financial services, and renewable energy. With a strong commitment to ESG principles, Mahindra aims to drive rural prosperity and urban development globally.

Conclusion

Mahindra Finance’s INR 3,000 crore rights issue marks a significant milestone in its growth journey, ensuring financial stability and expansion. With a commitment to quality asset growth and a solid balance sheet, MMFSL continues to play a crucial role in India's financial inclusion and economic development.

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