Mahindra Finance ₹3088.82 crore rights issue to open on 28 July 2020

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Mahindra Finance will be issuing 61.78 crore equity shares of face value of ₹2 each at a price of ₹50 per equity share aggregating to ₹3088.82 crore on a right basis. Mahindra Finance, a rural Non-Banking Financial Company headquartered in Mumbai, India is among the Top tractor Finances in India and it offers a wide range of financial products to address the varied customer requirements ad to service the needs of the customers. The bank said its ₹3088.82 crore rights issue will open for subscription on July 28,2020. 

The issue has been priced at a steep discount and that has bothered brokerages. After the Announcement made by the Bank, the company’s shares closed 8.94 percent lower at Rs.128.85 per share on Monday, while Benchmark Sensex dropped 0.51 percent to close at 37934. The deep discount issuances leave very little incentive for existing shareholders to not patriciate given the resultant sharp dilution. 

The Equity shares will be offered in the ratio of one equity share for every one equity share held by the eligible equity shareholders of the company as on the record date July 23,2020. The Rights issue will close on August 11,2020.  The funds raised from this issue will be used to repay certain outstanding borrowings of the company, augmented long-term capital and resources for meeting funding requirements for the company’s business activities and for the general corporate purposes. 

Kotak Mahindra Capital company Limited, Axis Capital Limited, BNP Paribas, Citi Groups Global Markets Private Limited, HDFC Ban Limited, among others are appointed as the lead managers to the rights issue. The Company provides loans for New and Pre owned auto and utility vehicles including Farming Vehicles, three wheelers, tractors, Cars and commercial vehicles and focuses primarily on the customers in the Rural and semi-urban markets of the country. 

In the First Quarter ending June 30,2020, Mahindra Financial Services has reported a net profit of ₹156 crores against ₹68 crores in the same quarter last year. The Total Consolidated Revenue increased by 8 percent to ₹3069 crores as compared to ₹2838 crore year-on-year.  The gross non- performing assets (NPA’s) stood at 9.19 percent as against 8.17 percent last year. The Net NPA was at 5.72% against 6.27 % last year. 

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