Mahindra and Mahindra Financial Services (Mahindra Finance) on Monday reported a 34 percent jump in consolidated net profit at Rs 353 crore for the second quarter ended September of this fiscal. The company had posted a net profit of Rs 264 crore during the corresponding quarter a year ago.

Total income increased 5 percent to Rs 3,071 crore during July-September quarter of 2020-21 as against Rs 2,936 crore in the same period of 2019-20, Mahindra Finance said in a regulatory filing.

The company, which mainly caters to rural and semi-urban markets, said there was a decline in profit before tax to Rs 488 crore from Rs 507 crore a year ago. It was mainly because of a higher level of impairment provisions/losses of Rs 282 crore in September quarter due to management overlay to reflect deterioration in the macroeconomic outlook arising out of COVID-19 pandemic related disruptions, the company said.

During the period ended September 30, 2020, the company's customer base crossed 6.9 million, it added. Standalone Assets Under Management (AUM) stood at Rs 81,682 crore as on September 30, 2020 as against Rs 72,732 crore a year ago, registering a growth of 12 percent.

The company maintains very healthy capital adequacy of 25.1 percent and has adequate capital and financial resources to run its business. The company's capital and debt position is strong and the ALM (asset-liability management) position is well balanced," Mahindra Finance said.

Standalone net profit grew by 21 percent to Rs 304 crore and income rose 4 percent to Rs 2,650 crore.

Mahindra Finance said the rural market has remained sufficiently insulated from the COVID-19 pandemic. The markets are now beginning to look up and the sentiments are turning positive. Agri demand continues to be strong on the back of good monsoon and harvest. Tractors, passenger cars and light commercial vehicles (LCVs) are seeing healthy demand, it said.

"We expect demand to further pick-up in the upcoming festival season. The government's focus on infrastructure and mining sectors is likely to further shore up demand, going forward. "Pre-owned vehicles will continue to be a growth driver. The company also expects to see an increase in digitally enabled lending and collections in rural and semi-urban markets," it added.

Mahindra Finance's gross non-performing assets (NPAs) stood at 7 percent at the end of September 2020 as against 7.9 percent a year ago. Net NPAs reduced to 4.7 percent from 6.4 percent a year ago. Shares of Mahindra Finance on Monday closed 2.86 percent lower at Rs 130.85 apiece on the BSE.