Buy M and M Financial; target of Rs 650: JM Financial

JM Financial is bullish on M and M Financial has recommended buy rating on the stock with a target price of Rs 650 in its research report dated July 27, 2018.

Broker Research

September 18, 2018 / 14:08 IST

26 Aug, 2025 12:21

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JM Financial's research report on M and M Financial

MMFS recorded a strong performance in a seasonally weak quarter with PAT of INR 2.7bn(up 34% YoY) on IndAS basis. Comparable IGAAP PAT for 1QFY19 is INR 1.9bn vs. INR0.5bnin 1QFY18, a 4x YoY growth. Moreover, migration to IndAS had a positive 2% impact on BV.Other key highlights are: i) acceleration in disbursement growth (35% YoY) driven by CV/CE,pre-owned vehicles and SME segments; this led to AUM growth improving to 21% YoY from16% last year. ii) GNPA ratio was stable at 9.4% in 1QFY19 with the lowest sequentialincrease in absolute GNPAs during the first quarter. Given the improved outlook for ruralIndia, we forecast earnings recovery to continue on the back of improvement in collections,decline in credit costs and pick-up in growth. We expect earnings CAGR of 53% over FY18-20E with RoA/RoE expanding to 2.88%/19% by FY20E. We believe MMFS is well-placed tobenefit from rural recovery driven by an improvement in higher farm-related cash flows andan increase in government spending.

Outlook

We maintain BUY with a Mar’19 TP of INR 650.

For all recommendations report, click here