Mahindra Finance flags festive slowdown as tractor lending trails other

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Mahindra Finance says tractor demand weakened more than other vehicle categories during early Navratri business.

By Amit Vijay Mohile

Updated - October 23, 2026 at 07:39 PM. | Mumbai

Raul Rebello, MD and Chief Executive, Mahindra Finance | Photo Credit: cueapi

Mahindra Finance has flagged weakening tractor demand and softer festive vehicle financing, warning that drought-related repayment pressures could emerge over the next two months despite strong September-quarter lending growth and improving asset quality.

Speaking to analysts during an earnings call, Managing Director and Chief Executive Raul Rebello said vehicle sales activity and financing volumes during the first 10 days of Navratri were below last year’s levels. Asked which segments were most affected, he responded, “Maybe tractors have seen a little more decline than last year.”

Rebello attributed part of the weakness to an unusually high comparison base, as pent-up demand following the GST change had boosted last year’s festive sales.

Tractor disbursements grew 13 per cent to ₹1,979 crore during July–September, compared with overall financing increasing from ₹13,514 crore to ₹16,499 crore, an increase of 22 per cent.

Passenger vehicle financing grew 28 per cent to ₹6,826 crore, while three-wheeler lending increased 32 per cent to ₹664 crore. Commercial vehicle and construction equipment financing rose 16 per cent to ₹2,657 crore, indicating uneven growth across vehicle categories.

Drought raises repayment concerns

Rebello said vehicle registrations in rural and semi-urban markets grew slightly faster than urban markets through September, suggesting drought conditions had not yet undermined overall rural demand. However, tractor purchases historically suffer when agricultural sentiment weakens.

The company is monitoring drought conditions across three States and 282 districts, where agricultural incomes influence vehicle purchases and loan repayments.

Asked whether drought-related stress was already affecting collections, Rebello said it was too early to assess the impact because tractor borrowers typically repay half-yearly instalments linked to the Kharif and Rabi harvests.

He indicated that some repayment delays would not be surprising as farmers adjust spending priorities but distinguished delayed payments from permanent defaults.

Mahindra Finance has curtailed lending in selected stressed locations, strengthened collection teams and retained a ₹852-crore management overlay against potential disruptions.

Asset quality at record levels

Combined Stage 2 and Stage 3 assets declined to an all-time low of 8.1 per cent, with Stage 3 falling three basis points and Stage 2 seven basis points sequentially.

Credit cost stood at 1.6 per cent, within the company’s unchanged guidance of 1.3–1.7 per cent.

Standalone net profit increased 55 per cent to ₹882 crore, while assets under management grew 15 per cent to ₹1,46,512 crore.

Rebello maintained that tractor financing remains attractive on returns but said the lender would not chase volumes at the expense of pricing or credit discipline.

With last year’s strong second-half business creating a difficult comparison, he cautioned, “This year we’re just hoping it’s not a reverse of the last year.”

The December–January repayment cycle will establish whether weaker tractor sentiment translates into loan stress, testing Mahindra Finance’s ability to sustain growth without compromising asset quality.

Published on October 23, 2026

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