M&M Financial Services announced that its board has given in-principle approval to evaluate a merger proposal with its subsidiary company. The decision was made during a board meeting held on January 28, 2026, marking a significant step toward potential corporate restructuring.

Board Decision Details

The board meeting, which commenced at 2:00 p.m. (IST) and concluded at 5:05 p.m. (IST), focused on evaluating the consolidation proposal. The company has authorized its management to engage various consultants, advisors, and intermediaries to facilitate the evaluation process.

Merger Proposal Structure

The proposed consolidation involves a scheme of merger by absorption of Mahindra Rural Housing Finance Limited (MRHFL) with M&M Financial Services. MRHFL is a 98.43% owned subsidiary of the parent company, making this an internal restructuring initiative.

Regulatory Compliance and Next Steps

The announcement was made pursuant to Regulation 30 and Regulation 51 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The in-principle approval comes with specific conditions that must be fulfilled before proceeding.

Key Conditions:

• Further evaluation by the Committee of Independent Directors
• Review and assessment by the Audit Committee of the Board
• Necessary recommendations from both committees
• Final consideration of the consolidation plan by the Board

Future Announcements

The company has committed to making necessary announcements in accordance with SEBI Listing Regulations following the completion of further evaluation and consideration of the final consolidation plan by the board. This information has been uploaded on the company's website under investor relations and regulatory filings section.

The merger evaluation represents a strategic move toward corporate consolidation, though the final decision remains pending comprehensive committee reviews and regulatory compliance procedures.

M&M Financial Services management conducted its Q3FY26 earnings conference call on January 28, 2026, providing detailed insights into the company's quarterly performance and strategic direction. The call was hosted by Kotak Institutional Equities and featured key executives including Managing Director & CEO Raul Rebello, CFO Pradeep Agrawal, and Chief Business Officer Sandeep Mandrekar.

Business Transformation Completion

CEO Raul Rebello announced the completion of the company's business transformation project called "Udaan," which has been driving capability building over the past couple of years. The transformation has resulted in significant operational improvements across customer and dealer fronts.

Profitability and Financial Performance

The management highlighted a visible step-up in profitability for Q3FY26, with the company achieving a quarterly ROA of 2.5%. For the nine months of FY26, ROA improved to 1.9%, moving closer to the management's target of 2% ROA.

Asset Quality Stabilization

The company reported continued stabilization in asset quality metrics, with Gross Stage 3 (GS3) remaining below 4% for the eighth consecutive quarter. The combined GS2 plus GS3 ratio was maintained below 10% for the same period.

Growth Strategy and Market Performance

Management emphasized the company's pivot to growth, supported by strong performance in the tractor financing segment. Q3FY26 recorded the highest-ever Q3 disbursements, driven primarily by tractor finance growth of 65%.

NIM Expansion and Fee Income Growth

The company reported NIM expansion of 50 basis points quarter-on-quarter to 7.5%, though management indicated that 7.1% for nine months is more representative due to one-time benefits. Fee and other income expanded to 1.4% from 1.1% in the previous year.

ECL Model Refresh and Provisioning

As part of the annual practice, the company conducted an Expected Credit Loss (ECL) model refresh in Q3FY26. Management created a management overlay of approximately ₹635 crore, maintaining the Provision Coverage Ratio (PCR) at 53% without taking benefits from the model refresh into the P&L.

Strategic Initiatives

The management announced plans to evaluate merging Mahindra Rural Housing Finance Limited (MRHFL) with the parent company to create operational efficiencies in the mortgage business. The 100% subsidiary has shown improved asset quality with GS3 below 3% for the last two quarters.

The earnings call concluded with management expressing confidence in achieving their medium-term ROA targets while maintaining asset quality discipline and pursuing strategic diversification initiatives.