Sharekhan's research report on Mahindra and Mahindra Financial Services
M&M Finance reported a healthy disbursement number for November 2022, up 75% y-o-y at Rs. 4,500 crore, driven by strong sectoral tailwinds. However, disbursements were lower 14% m-o-m, as October 2022 was a festive season month. YTD disbursement growth remained strong at 99% y-o-y. Gross business assets grew by 3.4% over September 2022 and 17.5% YTD reported at Rs. 76,300 crore. Collection efficiency improved to 96% in November 2022 vs. 91% m-o-m and 94% y-o-y. Stage-2 assets saw a sequential reduction compared to October 2022 and is estimated below 9% vs. 9.7% in Q2FY2023. Stage-3 assets remained stable at lower than 7%, as of November-end vs. 7% in Q2FY2023.
We expect MMFSL to deliver RoA/RoE of 2.3%/12.7% by FY2024E recovering from 1.3%/6.5% in FY2022. At the CMP, the stock trades at 1.8x and 1.7x its FY2023E and FY2024E, respectively, ABV. We reiterate Buy with an unchanged PT of Rs. 275.