Mahindra & Mahindra Limited operating cash flow turns negative

Mahindra & Mahindra Limited reported a Rs 673.12 crore net operating cash outflow for the half year ended 30 September 2026, reversing a Rs 1,203.12 crore inflow a year earlier, after financial-services receivables absorbed Rs 13,482.32 crore and working-capital uses exceeded cash generated from operations after tax.

Why did Mahindra & Mahindra’s operating cash flow turn negative?

Mahindra & Mahindra’s operating cash flow turned negative because Rs 13,584.03 crore of net working-capital uses and Rs 3,016.52 crore of net income taxes paid exceeded its Rs 15,927.43 crore operating profit before working-capital changes in the half year ended 30 September 2026. Cash generated from operations was Rs 2,343.40 crore, leaving a Rs 673.12 crore net outflow after tax.

The position changed from the half year ended 30 September 2025, when Mahindra & Mahindra generated Rs 3,530.36 crore from operations and retained Rs 1,203.12 crore after Rs 2,327.24 crore of tax payments. Operating profit before working-capital changes increased by Rs 2,805.46 crore year on year, but net working-capital consumption increased by Rs 3,992.42 crore and tax paid increased by Rs 689.28 crore.

How much cash did financial-services receivables absorb?

Financial-services receivables absorbed Rs 13,482.32 crore in the September 2026 half year, compared with Rs 7,270.09 crore in the corresponding 2025 half year. The Rs 6,212.23 crore year-on-year increase was the largest stated movement in the working-capital section of Mahindra & Mahindra’s cash-flow statement.

The movement coincided with higher consolidated loan balances at 30 September 2026. Non-current loans were Rs 94,370.06 crore, up from Rs 89,180.41 crore at 31 March 2026, while current loans increased to Rs 59,295.38 crore from Rs 51,137.04 crore. The combined increase of Rs 13,347.99 crore broadly tracked the half-year cash use reported for financial-services receivables.

Financial Services was Mahindra & Mahindra’s largest segment by assets, with Rs 1,74,402.04 crore at 30 September 2026 versus Rs 1,55,756.75 crore at 31 March 2026. Segment liabilities also increased to Rs 1,52,386.03 crore from Rs 1,31,591.34 crore, showing that the balance-sheet expansion was accompanied by additional funding liabilities.

Which other working-capital items reduced cash generation?

Trade and other receivables used Rs 4,608.20 crore and inventories used Rs 2,170.30 crore in the half year ended 30 September 2026. Together, these two items consumed Rs 6,778.50 crore, partly offset by Rs 6,676.79 crore generated from trade and other payables and provisions.

Inventories were a smaller cash use than the Rs 3,524.60 crore absorbed in the prior-year half, while trade and other receivables used Rs 2,006.78 crore more than the Rs 2,601.42 crore recorded a year earlier. Financial-services receivables therefore accounted for most of the increase in total working-capital consumption from Rs 9,591.61 crore to Rs 13,584.03 crore.

Mahindra & Mahindra’s consolidated inventories rose to Rs 24,125.26 crore at 30 September 2026 from Rs 22,044.11 crore at 31 March 2026. Trade receivables rose to Rs 9,903.56 crore from Rs 9,064.27 crore over the same six months, consistent with the reported cash outflows, although the filing does not allocate each balance-sheet movement to individual businesses.

Did Mahindra & Mahindra’s higher profit offset cash absorption?

Higher profit did not offset the cash absorption during the September 2026 half year. Mahindra & Mahindra’s profit before share of profit of associates, joint ventures and tax rose to Rs 14,155.27 crore from Rs 10,754.65 crore, while profit after tax increased to Rs 11,164.33 crore from Rs 8,340.33 crore.

Depreciation, amortisation and impairment expense increased to Rs 3,592.35 crore from Rs 3,216.45 crore, while dividend and interest income excluding Financial Services was deducted at Rs 1,199.71 crore. Total adjustments were Rs 1,772.16 crore in the 2026 half year, compared with Rs 2,367.32 crore in the prior-year period, producing the Rs 15,927.43 crore operating-profit measure before working-capital changes.

Segment results before associates and joint ventures showed Automotive rising to Rs 5,980.56 crore from Rs 4,665.73 crore and Financial Services increasing to Rs 2,368.28 crore from Rs 1,399.82 crore. Farm Equipment declined to Rs 3,157.60 crore from Rs 3,236.28 crore, but total segment result increased to Rs 12,850.70 crore from Rs 9,834.92 crore.

How were investing and financing cash flows positioned?

Mahindra & Mahindra used Rs 9,969.60 crore in investing activities in the half year ended 30 September 2026, compared with Rs 2,514.83 crore in the previous year’s half. Payments to acquire property, plant and equipment and other intangible assets rose to Rs 7,364.70 crore from Rs 3,956.74 crore, while investment purchases of Rs 88,324.87 crore exceeded sale proceeds of Rs 80,135.36 crore.

Financing activities generated Rs 14,795.80 crore during the 2026 half year, compared with an outflow of Rs 1,962.47 crore in the comparable 2025 period. Borrowing proceeds were Rs 56,707.87 crore and repayments were Rs 37,201.70 crore, while dividends paid, including unclaimed dividends, were Rs 3,683.49 crore.

The combined cash flows increased cash and cash equivalents by Rs 4,153.08 crore before the stated effect of subsidiary disposals and foreign-currency movements. Mahindra & Mahindra ended 30 September 2026 with Rs 8,165.74 crore of cash and cash equivalents, compared with Rs 4,292.24 crore at the beginning of the period, after financing inflows offset operating and investing outflows.

Conclusion

Mahindra & Mahindra’s September 2026 half-year results show a divergence between reported profit and operating cash flow. Profit after tax rose by Rs 2,824.00 crore year on year, but the Rs 13,482.32 crore cash use for financial-services receivables, together with other working-capital uses and tax payments, resulted in a Rs 673.12 crore operating cash outflow.

The filing provides no operating cash-flow target for the remainder of the year. It also says the implementation framework and pricing mechanism for End-of-Life Vehicles Rules, effective from 1 April 2025, remain undeveloped, and Mahindra & Mahindra will assess its obligation when those details become available.