Mahindra & Mahindra Financial Services Limited shares rallied over 9% to Rs 211.80 on the BSE in Thursday’s intra-day trade despite the company reporting a weak set of earnings numbers for the July-September quarter. However, the company also reported strong growth in disbursement taking it to multi-year highs.

The stock opened at Rs 201.20 per share on BSE and hit the upper circuit of Rs 213.60, up by Rs 18 from the previous day’s close.

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In the September quarter, the Mumbai-based non-banking finance company (NBFC) reported a profit after tax (PAT) of Rs 448.33 crore in September 2022 quarter down 56.17% from Rs 1,022.90 crore in the corresponding quarter of the previous financial year.

Disbursement during the quarter stood at Rs 11,824 crore, posting a growth of 83% year-on-year and 25% sequentially. The loan book increased 9% to Rs 73,817 crore compared to June 2022 quarter supported by an increase in disbursements.

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Asset quality improved as stage 3 declined from 8% in the April-June quarter to 6.7% in the July-September quarter.

Net sales stood at Rs 2,585.84 crore in the second quarter, a growth of 3.11% from Rs 2,507.90 crore in the year-ago period. The company’s EBITDA stands at Rs 1,779.93 crore in the reported quarter, down 26.64% from Rs 2,426.42 crore in the year-ago quarter.

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Mahindra Finance’s net interest income (NII) grew 2% year-on-year and declined by 2% quarter-on-quarter at Rs 1,517 crore. Net interest margins (NIM) came in at 7.5% in line with what management had projected.

“While it has exhibited a volatile operating performance and weak asset quality in the past, the various strategic initiatives undertaken by the management, if executed correctly, have the potential to script a credible transformation,” said analysts at Motilal Oswal, in their initial commentary on Q2 numbers.

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“A strong liability franchise and deep moats in rural and the semi-urban customer segment positions M&M Financial Services well to reap rewards of the hard work that is currently going into evolving this franchise.”

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The company has not provided any update on the Reserve Bank of India (RBI) ban on the usage of third-party agencies for collections and repossessions. However, it said that the management has reviewed its hiring process from manpower staffing agencies and migrated 6,000 to its rolls on a fixed-term contract.