Mahindra Finance to Raise Rs.2,996 Crore via Rights Issue to Strengthen Capital Base

Mahindra & Mahindra Financial Services Ltd. (MMFSL), a leading non-bank financial company, has announced the details of its upcoming rights issue, which aims to raise up to ₹2,996.16 crore to strengthen its capital base. This move will help the company support future growth and meet regulatory requirements.

The company’s board has approved the issue of 15.44 crore fully paid-up equity shares at a price of ₹194 per share. This price includes a premium of ₹192 per share, with a face value of ₹2. Shareholders who wish to apply for the rights shares must pay the full amount of ₹194 when making their application. Click here to read more news.

The record date for the rights issue has been set for May 14, 2025, which will determine which shareholders are eligible to receive the Rights Entitlement (RE). The subscription window for the rights issue will open on May 22, 2025, and close on June 6, 2025. The company has the option to extend the closing date by up to 30 days.

Rights Entitlement Ratio and Process

Eligible shareholders can apply for one rights share for every eight shares they already own as of the record date. If the rights issue is fully subscribed, the total number of outstanding shares after the issue will increase to 1,38,99,71,160 from the current 1,23,55,29,920 shares.

Shareholders who do not wish to apply for the rights shares can renounce their rights, either partially or fully. Renunciation can be done on the stock exchanges through the secondary market or via off-market transfers. The last date for on-market renunciation is June 3, 2025, while off-market renunciations can be accepted until June 5, 2025. Click here to read more news.

Recent Financial Performance

This rights issue announcement comes after MMFSL’s strong financial results for the fiscal year 2025. The company saw a 33% increase in post-tax profit, which reached ₹2,345 crore, up from ₹1,760 crore in the previous year. However, for the quarter ending March 2025, the company’s standalone net profit declined by 9%, reaching ₹563 crore, compared to ₹619 crore for the same period last year.

Despite this decline, MMFSL saw a 9% rise in core net interest income to ₹2,156 crore, supported by a 17% increase in the loan book. The company’s interest margin, however, narrowed to 6.5% from 7.1% year-on-year. A key factor affecting the profits was a significant 34% increase in provisions or credit costs, which climbed to ₹457 crore from ₹341 crore in the previous year.

Earlier in the fiscal year, for the third quarter of FY25, the company reported a strong 63% year-on-year increase in profit, reaching ₹899 crore. Disbursements in the December quarter grew by 7% year-on-year to ₹16,467 crore, while total income rose by 19% year-on-year to ₹4,144 crore. Click here to read more news.

Market Reaction

Ahead of the rights issue announcement, Mahindra Finance’s shares dropped by 2.35% to ₹255.15 on May 8, 2025, with the benchmark Sensex also experiencing a 0.5% decline. As of the morning of the announcement, the company’s share price was down another 2.65%, trading at ₹248.10.

The funds raised through the rights issue are expected to significantly strengthen Mahindra Finance’s capital position, supporting its ongoing growth initiatives and ensuring the company meets its regulatory capital requirements.