M&M Financial Shares Drop 8% as NBFC Postpones Q4 Results Due to Alleged Fraud at Northeast Branch

Shares of Mahindra & Mahindra Financial Services Ltd took a hit today, plummeting as much as 8.5% after the company revealed a fraud at one of its branches in the northeast. The company has deferred its Q4 FY24 earnings as a result of this incident, with the financial impact estimated to be around ₹150 crore.

According to an exchange filing, the fraud involved the forgery of KYC documents, leading to the misappropriation of funds related to retail vehicle loans disbursed by the company. Investigations are currently ongoing, with corrective actions already identified and in the process of implementation.

As a consequence of the fraud, the approval of the audited financial results for the fourth quarter and financial year ended March 31, 2024, along with other agenda matters, have been postponed to a later date.

Currently, shares of M&M Financial are trading at ₹267.15, down 3.73% on the BSE. The stock has underperformed in the past year, rising only 4.31%. The company’s Q3 FY24 PAT declined 12% YoY, but grew 135% QoQ to ₹550 crore.

Despite the setback, Mahindra & Mahindra Financial remains focused on its strategic collaborations and digital initiatives. In February 2024, the company announced plans to develop a “super app” to provide consumers with a seamless digital experience across its various businesses.

Looking ahead, the company anticipates a more subdued performance in FY25 compared to the previous year, citing tempered disbursements. As a key player in the rural and semi-urban sectors, Mahindra & Mahindra Financial serves over 9.8 million customers with an AUM exceeding $11 billion, offering loans to SMEs and fixed deposits.