Shares of Mahindra & Mahindra Financial Services Ltd. dipped over 12 percent on Friday, September 23rd, after RBI restrained the company from outsourcing recovery activity.
During Friday's trade, the share price opened on a negative note at Rs. 210.70 against the previous close of ₹223.70.
The stock has dropped 11.5 percent from its 52-week high of Rs. 235.10 set on September 15, 2022, and after touching an intraday low of Rs. 192.05, the stock is ₹64.05 away from its 52-week low of Rs. 128. However, the stock has gained almost 25.15 percent since past six months.
On Thursday the RBI barred Mahindra & Mahindra Financial Services Ltd (MMFSL) from carrying out any recovery or repossession activity through third-party agents with immediate effect till further orders.
The RBI action came after a 27-year-old pregnant lady was reportedly crushed to death in Jharkhand's Hazaribagh by a tractor being forcedly driven away by the company's recovery agent.
However, the MMFSL, a non-banking finance company, may continue to carry out recovery or repossession activities, through its own employees, the central bank said in a statement.
The company stated in an exchange filing that the limitation by RBI would not significantly affect the collections.
It said, “In the normal course of its business, the company repossesses about 4,000 to 5,000 vehicles per month, using the third-party agencies and its own employees. We expect this number to go down temporarily by about 3000 to 4000 per month, as the company implements the RBI order with immediate effect.”
M & M Fin. Services’ shares have been declining since the start of the week. The firm reported a consolidated total income of ₹2,913.95 Crore for the quarter ended June 30, 2022, an increase of 0.57 percent over the previous quarter's Total Income of ₹2,897.44 Crore and 13.52% from the same quarter last year's total income of ₹2,566.84 Crore. In the most recent quarter, the company achieved net profit after tax of ₹228.16 crore.
Founded in 1991, Mahindra & Mahindra Financial Services Ltd. is a large cap business with a market valuation of Rs. 27,638.80 crore that operates in the NBFC sector. This Mumbai-based company is one of India's major tractor financiers.