Accumulate Mahindra and Mahindra Financial Services; target of Rs 553: Prabhudas Lilladher

Prabhudas Lilladher's research report on Mahindra and Mahindra Financial Services

PL hosted the Farm & Motor Vehicle vertical heads of MMFS for investors and based on the feedback received,  we continue to be optimistic on commentary of rural economy improvement seen post the headwinds earlier. Key takeaways were (i) Growth has been improving from return in infra activity and cash flow in many troubled pockets as well from penetration in new areas (ii) two years into vertical led business model has turned out to be sucessful improving reach & with targeted collections ability and (iii) internal programs for customers coupled with reach has helped strong relationships with OEM & dealerships helping retain market shares. We believe, rural recovery should agur well for growth and recovery from NPAs can bring tailwind to earnings helping deliver ROA of 2.6‐2.8%by FY20.

Outlook

We retain Accumulate with revised TP of Rs553 based on 3.2x Mar‐20 ABV.