Mahindra and Mahindra Financial Services Limited 'Crisil AAA/Stable' assigned to Subordinated Debt and Non Convertible Debentures; Rated amount enhanced for Bank Debt, Fixed Deposits and Commercial Paper
Rating Action
The common independent director on Crisil Ratings Limited and Mahindra and Mahindra Financial Services Limited boards did not participate in the rating process or in the meeting of the rating committee, when the rating for securities of Mahindra and Mahindra Financial Services Limited was discussed. This rating was also not discussed in the meeting of Crisil Ratings’ Board of Directors. Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale Crisil Ratings has assigned its ‘Crisil AAA/Stable’ rating to Rs 887 crore subordinated debt and Rs 2,125 crore non convertible debentures of Mahindra and Mahindra Financial Services Limited (Mahindra Finance). Crisil Ratings has reaffirmed its ‘Crisil AAA/Stable/Crisil A1+’ ratings on the bank facilities and existing debt instruments of Mahindra Finance.
Crisil Ratings has also withdrawn its rating on Rs. 4,020 crore non-convertible debentures, (see the ‘Annexure - Details of Rating Withdrawn' for details) on receipt of independent confirmation that these instruments are fully redeemed and at the request of the company, in line with its withdrawal policy.
The ratings continue to reflect the company’s majority ownership by, and strategic importance to, the parent, Mahindra & Mahindra Ltd (M&M; rated ‘Crisil AAA/Stable/Crisil A1+’). As Mahindra Finance remains the largest financier of M&M’s automotive and tractor business with strong dealer relationships, Crisil Ratings expects the financial services business housed in Mahindra Finance to remain strategically important to M&M. With extensive experience, expertise and penetration in rural and semi urban markets, Mahindra Finance is a key part of M&M’s growth strategy in these markets.
Crisil Ratings expects M&M to maintain majority shareholding in Mahindra Finance and exercise management oversight over the company to conduct its business in line with governance and compliance standards that all Mahindra group entities follow, including Mahindra Finance, honoring its debt obligation in a timely manner.
The rating also reflects the strong position of the company in the utility vehicle (UV) and tractor financing business in rural and semi-urban areas, its adequate capitalization and stable resource profile. These strengths, however, are partially offset by the company’s modest, though stable, asset quality. |
Analytical Approach For arriving at the ratings, Crisil Ratings has combined the business and financial risk profiles of Mahindra Finance and its key subsidiaries, Mahindra Rural Housing Finance Ltd (MRHFL) and Mahindra Insurance Brokers Ltd (MIBL). While MRHFL is in the rural housing finance segment, a fund-based business, MIBL is in insurance broking, a fee-based business.
Crisil Ratings has factored in the strong support the company is likely to receive from its parent, M&M, on an ongoing basis and in times of distress.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation |
Key Rating Drivers - Strengths Majority ownership by, and strategic importance to, M&M The ratings factor in the strategic, financial and operational linkages between Mahindra Finance and M&M. The parent participated in the rights issue in June 2025 following which its stake in Mahindra Finance went up to 52.49% from 52.20%. Crisil Ratings expects M&M to maintain majority shareholding in Mahindra Finance and exercise management oversight over the company to conduct its business in line with governance and compliance standards that all Mahindra group entities follow, including Mahindra Finance, honouring its debt obligation in a timely manner.
Mahindra Finance continues to finance around 46% of M&M Assets. As part of its growth strategy, Mahindra Finance has been increasingly financing vehicles of other manufacturers which would impart diversity to its business channel.
In the last two equity capital issuances done by Mahindra Finance, M&M cumulatively infused Rs ~3294 crore – demonstrating the strong financial and strategic linkages. M&M is expected to support Mahindra Finance on an ongoing basis and in case of distress, given the majority ownership, shared brand name and the strategic importance of the financial services business.
Prominent market position in rural and semi-urban areas, particularly in the UV and tractor financing businesses Mahindra Finance’s market position in the Utility Vehicle (UV) and tractor financing segments remains strong, owing to the operational linkages with M&M, which enables the company to access the parent’s widespread dealer network. The overall business assets stood at Rs 1,19,673 crore on March 31, 2025. Disbursements in the first nine months of fiscal 2026 were Rs 43,934 crore which yielded a growth of 7% (annualised) in gross loan assets, taking this metric to Rs 1,28,965 crore as on December 31, 2025.
As on December 31, 2025, the company finances consumer purchases of passenger vehicles (41.2% of gross business assets), commercial vehicles (CV)/commercial equipment (CEs) (20.6%), tractors (12.1%), pre-owned vehicles (12.3%) and other assets. The company endeavors to diversify into and increase its non-vehicle portfolio over the medium term. In the last 2-3 years, the company has started to offer products such as small and medium enterprise (SME) loans, loan against property (LAP) and leasing. However, the company’s ability to profitably scale these newer portfolios remains monitorable.
The company has considerably strengthened its distribution network: it had over 1,300 branches across 27 states and 7 Union Territories as on December 31, 2025, with a large number of branches in semi-urban and rural areas, where it enjoys a strong market share. To leverage its existing presence in these geographies, Mahindra Finance has been expanding its rural housing finance portfolio through MRHFL.
Adequate capitalisation and stable resource profile Capitalisation continues to be adequate, as reflected in tier I and overall capital adequacy ratios of 15.2% and 18.3% respectively, as on March 31, 2025 (22.5% and 19.9%, respectively, as on March 31, 2023). In the first nine months of fiscal 2025, Tier 1 and overall capital adequacy ratios stood at 17.4% and 19.8%, respectively as on December 31, 2025. Networth was sizeable at Rs 23,828 crore and gearing* of 4.8 times, respectively as on December 31, 2025 (Rs 19,812 crore and 5.6 times, respectively, as on March 31, 2025). Networth coverage* for net non-performing assets (NPAs) stood at 10.3 times as on December 31, 2025.
Apart from internal accruals, the company’s capital profile remains supported by its demonstrated ability to raise equity capital on a timely basis.
Apart from capitalization, financial flexibility also benefits from the company’s stable and diversified resource profile and adequate unutilised bank limits along with its demonstrated ability to raise resources at competitive costs. As on December 31, 2025, the company had a fairly diverse borrowing mix consisting of 20.2% of NCDs, 10.5% of securitisation, 11.8% of fixed deposits and 45.8% of bank borrowings. Cost of borrowing was reasonable and is expected to remain better than industry average over the medium term. |
Key Rating Drivers - Weaknesses Modest, albeit stable, asset quality Mahindra Finance’s asset quality, though stable, remains modest. Gross stage 3 (GS3) assets stood at 3.8% as on December 31, 2025 (3.7% as on March 31, 2025). This also remains supported by write-offs - the company wrote off Rs 1,460 crore during 9M FY26 as compared to Rs 1,559 crore in fiscal 2025.
The company continues to lay emphasis on collection and recovery efforts and Crisil Ratings notes that Mahindra Finance has shown ability to ultimately recover from delinquent accounts even post loan maturity date. Overall ultimate credit loss has been in the range of 1% to 3% over the past 10 years. The company's track record in the vehicle financing business, understanding of the target customer segment and robust underwriting practices are expected to support the asset quality metrics on a steady state basis. However, with newer portfolios scaling up, the company’s ability to maintain sound asset quality metrics alongside seasoning of these newer books, remains critical.
Credit costs* for nine months ended December 31, 2025 were 1.7% as compared to 1.2% for the corresponding period of the previous fiscal.
For fiscal 2025, net profit was Rs 2,346 crore translating to a return on managed assets (RoMA*) of 1.8%, higher than Rs 1,760 crore of profit and a corresponding RoMA of 1.6% for fiscal 2024. The slight increase in RoMA was due to increase in fee income and reduced credit cost in fiscal 2025. For nine months ended December 31, 2025, the net profit and RoMA were Rs 1,909 crore and 1.7%. |
Liquidity Superior With respect to asset liability management, there were no negative cumulative mismatches in any bucket up to five years as on December 31, 2025. The liquidity position as on February 28, 2026 in addition to scheduled inflows for the following 2 months is sufficient to cover the debt obligations over the same period. Moreover, in Crisil Rating’s view, being a part of the M&M group, additional liquidity support will be available to the entity as and when required. |
ESG Profile Crisil Ratings believes the ESG profile of Mahindra Finance supports its already strong credit risk profile.
The ESG profile of financial institutions typically factors in governance as a key differentiator. The sector has reasonable social impact because of its substantial employee and customer base. While the sector does not have a direct adverse environmental impact, lending decisions may have a bearing on environment and other sustainability factors.
Mahindra Finance has demonstrated focus on strengthening various aspects of its ESG profile.
Key ESG highlights:
There is growing importance of ESG among investors and lenders. The company’s commitment to ESG will play a key role in enhancing stakeholder confidence, given high share of foreign investors as well as access to both domestic and foreign capital markets. |
Outlook Stable Crisil Ratings believes Mahindra Finance will benefit from the support it is expected to receive from M&M, given the majority shareholding of, and Mahindra Finance’s strategic importance to, its parent. Crisil Ratings also believes the company will maintain its strong market position and adequate capitalisation over the medium term. |
Rating Sensitivity Factors Downward Factors:
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About the Company Mahindra Finance, a non-banking financial company (NBFC), was incorporated in 1991. M&M, the majority shareholder, held 52.49% in Mahindra Finance as on December 31, 2025. Mahindra Finance ranks among the larger NBFCs in India with gross loan assets of Rs 1,28,965 crore as on December 31, 2025 (Rs 1,19,673 crore as on March 31, 2025). The company finances consumer purchases of UVs, LCVs, tractors, cars and other assets. It has recently started offering products such as SME loans, LAP and leasing. To leverage its extensive branch network and rural clientele, the company has entered the rural housing finance business through its subsidiary, MRHFL. MIBL is the insurance broking arm of Mahindra Finance, providing insurance broking services both in the life and non-life segments.
On consolidated basis, total income and net profit were Rs 18,530 crore and Rs 2,261 crore, respectively, in fiscal 2025, against Rs 15,970 crore and Rs 1,943 crore, respectively, in fiscal 2024. For 9M FY26, total income and net profit were Rs 15,527 crore and Rs 1,921 crore, respectively.
On standalone basis, the company reported total income of Rs 16,075 crore and net profit of Rs 2,345 crore in fiscal 2025 as compared to Rs 13,562 crore on Rs 1,760 crore respectively in fiscal 2024. (For 9M FY26, total income and net profit were Rs 13,690 crore and Rs 1,909 crore, respectively. |
Key Financial Indicators (on a standalone basis)
^on business assets *as per Crisil Rating’s standard calculation methodology |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
^not yet issued/availed
Annexure - Details of Rating Withdrawn
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Annexure - List of Entities Consolidated
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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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