Mahindra & Mahindra Fin has target of Rs 732: Jigar Shah

Shah told CNBC-TV18, "Mahindra & Mahindra Financial Services is able to defy the current slowdown in the auto sector. Its expansion of the distribution network, gaining market share in the car and the truck segment, the new trucks as well as the used trucks segments, is behind its loan growth of 25%. The auto sector growth will be 10-12% this year."

He further added, "Apart from that, their rural housing business also doing very well and is likely to increase loans by almost 100% in the current year. So, we feel that Mahindra Finance is quite well place to grow the revenue."

"On the margin front, the cancellation of the priority sector loan advantage will take away about 20 bps of net interest margin. But we feel that overall earnings growth will be still good at 18-19% for FY12. So, based on a price to book of two-and-a-half time, we have set a target price of Rs 732 for the stock. We believe that that is well justified by return on equity in excess of 21%."