Mahindra & Mahindra Finance shares dropped nearly 3 percent on July 23, a day after the company released its results for the first quarter of the financial year 2026. Brokerages issued muted reviews for the stock, which was trading at around Rs 258 apiece in the afternoon.
The company reported a net profit of Rs 530 crore for Q1 FY26, marking a sequential decline of nearly 6 percent from the Rs 563 crore reported in the previous quarter (Q4 FY25). The firm's net profit however rose 3 percent on-year from the Rs 513 crore reported in the corresponding quarter of the previous financial year (Q1 FY25).
M&M Finance's net interest income (NII) jumped 18 percent on-year to Rs 2,285 crore in Q1 FY26, from Rs 1,932 crore in Q1 FY25. On a sequential basis, NII rose 6 percent from Rs 2,156 crore reported in Q4 FY25.
Net profit margin however declined to 11.93 percent in the quarter under review. It had earlier reported net profit margin at 13.27 percent in Q4 FY25, and 13.64 percent in Q1 FY25. Disbursements rose 1 percent on-year, but dropped 18 percent sequentially to Rs 12,808 crore.
"While the overall disbursement growth was relatively subdued, tractor disbursements grew 21% YoY. The company’s business assets grew by ~15% YoY, reaching ₹1,22,008 crore as of June 30, 2025, demonstrating strength in the underlying portfolio. Collection efficiency marginally improved to 95%, up from 94% in Q1 FY25, indicating stability in customer repayments," the firm said.
Also read: Our LIVE blog on Q1 updates
Should you buy, sell or hold?
Macquarie kept an 'Underperform' call on the stock, with a target price of Rs 235 per share. This implies a downside potential of more than 11.5 percent from the stock’s previous closing price of Rs 265.55 apiece.
The international brokerage said that the profit after tax missed on estimates due to higher credit costs, which was partly offset by margin improvement. It noted that the firm’s management guides for credit cost of 1.7 percent for FY26. It added that the firm’s sustainable RoA is likely to remain lower than peers.
Also read: Hold M&M Finance, target of Rs 285; says Prabhudas Lilladher
UBS kept a 'Neutral' call on the stock, and lowered its target price to Rs 285 per share. This implies a upside potential of more than 7 percent from the stock’s previous closing price.
UBS also said that the PAT fell below expectations on account of higher credit costs, but NII and PPoP slightly beat estimates. It said that the outlook remains soft, and growth could stay subdued in FY26.
M&M Financial guided for a growth rate in the mid-teens in medium term. Challenges persist in both entry-level PV and CV segments, UBS said.
M&M Finance shares have fallen over 1 percent in the past one month, and nearly 4 percent in the past six months. It gained around 87.5 percent in the past five years. The stock currently has a P/E ratio of 16.58.
Also read: Our LIVE blog on stock market updates
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