Non-bank lender Mahindra & Mahindra Financial Services on Wednesday reported a 10% year-on-year decline in consolidated net profit to ₹826 crore for the quarter ended December 2025 (Q3 FY26), impacted by one-time adjustments related to the new labour code.
The company had reported a consolidated net profit of ₹918 crore in the corresponding quarter last year.
On a standalone basis, profit after tax declined 10% to ₹810 crore, compared with ₹899 crore in Q3 FY25.
Labour Code Impact and Adjusted Profit
Mahindra Finance said the implementation of the new labour code resulted in a one-time impact of ₹97 crore during the quarter. It also noted that profits in the year-ago period were aided by a provision write back of ₹436 crore.
After adjusting for these one off items, the company said adjusted profit after tax nearly doubled to ₹907 crore in Q3 FY26, reflecting strong underlying operating performance.
Strong Core Growth
Core business metrics remained healthy during the quarter:
- Net interest income (NII) rose 27% year-on-year to ₹2,661 crore
- NIM expanded by 90 basis points to 7.5%
- Loan book grew 12%, supporting topline momentum
The company attributed the NII growth to improved yields and sustained demand across its core lending segments.
Asset Quality and Credit Costs
On asset quality, gross Stage 3 assets (loans overdue by more than 90 days) stood at 3.8% of total advances, which the company said was within its guided range.
However, credit costs increased sharply to ₹470 crore during the quarter, compared with ₹9 crore in the year-ago period, reflecting a more conservative provisioning approach.
Capital Position Remains Comfortable
Mahindra Finance reported a capital adequacy ratio of 19.8%, with core Tier-I capital at 17.4%, providing adequate headroom for growth.
Market Reaction
Shares of Mahindra Finance closed 1.57% higher at ₹396.60 on the BSE, outperforming the broader benchmark, which gained 0.60% during the session.
Why It Matters
While headline profitability declined due to regulatory adjustments, Mahindra Finance’s Q3 FY26 results highlight strong core earnings momentum, improving margins and stable asset quality. The company’s ability to manage credit costs and sustain loan growth will be key drivers for earnings performance over the coming quarters.
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