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Digitizing operations to drive scale, efficiency, cross-selling

The strategic pivot: From paper-heavy to high-tech, high-touch operations

We visited the central processing center (CPC) of Mahindra Finance (MMFS), where management provided insights into its digital transformation strategy, covering the Udaan program, digital onboarding and underwriting, CPC automation, Samur.AI, and the evolving branch-led cross-selling model. We subsequently visited a tractor dealership in Pune to understand the practical implementation of these initiatives across sourcing and collections, including seeing the M TEZZ app and Samur.AIenabled automation live in action.

* MMFS has executed a strategic transformation under Udaan to transition from manual, decentralized processes toward a standardized, technologydriven operating model. The focus is on creating a common operating framework across the lending franchise, with BRE and scorecard-based underwriting, standardized SOPs and greater process consistency, thereby reducing the dependence on localized underwriting practices. The transformation is now fully operational across its core vehicle lending franchise, with digital onboarding, automated underwriting, centralized processing and AI-led verification reshaping the lending workflow.

* Digital adoption has materially improved origination efficiency, with time to first offer declining from 6-7 days to 20 minutes, while login-todisbursement time has come down from 10-12 days to same day/within two days for most cases. The M Tezz field app, 13k+ BRE rules, account aggregator and Bureau integrations, and digital KYC/e-sign support this transformation

* The combination of faster decision-making and proprietary data is a key differentiator, with 30 years of repayment history embedded in scorecards and BRE. This enables MMFS to provide firm, risk-based offers at dealerships, including for selected new-to-credit customers, supporting dealer conversion. Tractor disbursements grew >45% vs. ~20% industry growth in the prior year.

* Importantly, productivity gains are being redeployed toward growth rather than simply reducing headcount. Branches are moving from a service-heavy model toward outbound sales and cross-selling, supported by the capacity released through CPC. Insurance premium recorded strong growth in FY26, while FD mobilization has doubled over the past two years. Personal loans are emerging as the next major cross-selling opportunity (still limited to existing customers).

* Overall, Udaan is strengthening MMFS’ lending proposition through faster origination, standardized underwriting, CPC efficiency and broader customer monetization.

Udaan: Re-engineering the end-to-end lending journey

Udaan has moved MMFS from a largely paper-based, branch-led lending process to a digital-first workflow covering customer onboarding, underwriting, document verification and disbursement. The M Tezz mobile app captures customer and asset information at source, while integrations with UIDAI, CIBIL, VAHAN and account aggregator enable digital KYC, bureau checks, vehicle verification and banking analysis. The process is completed through automated documentation, Aadhaarbased e-sign and e-mandates (with ~85-90% of the recent originations and ~70% of the outstanding portfolio now covered by e-mandates). First-offer TAT has come down from ~6-7 days to ~20 minutes, while the broader login-to-disbursement cycle has declined from ~10-12 days to same day/within two days for most cases

Proprietary underwriting engine strengthens speed and decision quality

BRE is the core decision-making layer behind the faster customer journey, with 13k+ rules covering policy, risk classification, deviation management and regulatory requirements. Rather than replacing underwriters, the system standardizes the initial decisioning process and allows human underwriters to focus on exceptions and negotiated cases. A key competitive element is the use of 30 years of proprietary repayment data. MMFS has converted this historical data into customer personas and scorecards, which are combined with real-time bureau and banking information. This allows the company to assess certain new-to-credit customers even in the absence of a conventional bureau history. For example, customer attributes such as geography, landholding and crop mix can be mapped against historical repayment behavior to generate an initial offer. The digital journey is nevertheless not universal. Informal-income customers may still require physical business assessment, while customers seeking higher LTVs trigger additional field verification. Management estimates ~85% of cases are processed within the targeted TAT, with the balance requiring additional checks because of limited bureau/banking information or other exceptions.

CPC + Samur.AI: Significant scope for operating leverage

Centralization through the CPC has created a scalable processing architecture across the branch network. The CPC rollout covered 1,300+ branches within ~11-12 months, significantly faster than the usual 2-3 years of industry implementation period. The two CPC hubs now conduct 200-300+ checks per file, with typical processing completed within 2-3 hours. The productivity gains are significant. CPC file volumes have increased ~8x, while cost per file has fallen to ~54 from a 100 base (indexed) and TAT has reduced to ~49. At the same time, CPC headcount has declined from ~885 to ~465. This suggests automation is absorbing incremental processing volumes rather than merely shifting work between teams

Samur.AI is increasingly central to this productivity improvement. The multi-agent AI system currently covers ~70% of new-loan volumes (vs. ~45% in 1QFY27). It performs document and data verification, including regional-language documents and highly variable dealer documentation, and provides a rationale when a case is flagged for human review. Samur.AI currently operates within the CPC rather than the credit-decision-making layer and its future expansion into underwriting and collections could provide additional automation opportunities for the company.

Valuation and view

* Udaan is emerging as a meaningful competitive lever for MMFS, with faster TAT, data-led underwriting and CPC automation supporting growth, productivity and dealer conversion. Rising Samur.AI adoption and higher branch-led cross-selling should provide further operating leverage and fee-income opportunities.

* MMFS currently trades at 1.8x FY27E P/BV and 14x FY27E P/E. With a projected PAT CAGR of ~23% over FY26-FY28E and RoA/RoE of 2.4%/14.5% in FY28E, we reiterate our BUY rating with a TP of INR430 (based on 2x Mar’28E BV).

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