Buy Mahindra and Mahindra Financial Services; target of Rs 275: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Mahindra and Mahindra Financial Services

Mahindra & Mahindra Financial Services Ltd.’s (MMFSL’s) credit costs is expected to moderate (from 3.9% in Q1FY23 to ~2%) in H2FY23 driven by a fall in repossession losses and write-offs. We believe the pandemic-led stress has mostly been factored into credit costs through accelerated write-offs. Effect of change in NPA recognition norms may be lower as reflected in sharp reduction in stage-2 loans (from 19.4% peak to 11.7% currently) and sustained ECL buffers (6.8%). Business momentum continues to remain robust as reflected in strong disbursements (up 104% y-o-y YTD). Branch expansion, incremental volumes from new product offerings (SME, LAP and Digital) and market share gains in auto/ UV segment would help to sustain healthy momentum.

Outlook

We expect MMFSL to deliver RoA/ RoE of 2.3%/ 12.7% by FY24E recovering from 1.3%/ 6.5% in FY22. At the CMP, the stock trades at 1.9x and 1.7x its FY2023E/FY2024E ABV. We reiterate a Buy on the stock with a revised PT of Rs. 275.

More Info

At 14:47 hrs Mahindra & Mahindra Financial Services was quoting at Rs 230.10, up Rs 4.35, or 1.93 percent.

It has touched an intraday high of Rs 230.85 and an intraday low of Rs 221.60.

It was trading with volumes of 105,191 shares, compared to its thirty day average of 265,204 shares, a decrease of -60.34 percent.

In the previous trading session, the share closed up 0.11 percent or Rs 0.25 at Rs 225.75.

The share touched its 52-week high Rs 231.55 and 52-week low Rs 127.95 on 13 September, 2022 and 07 March, 2022, respectively.

Currently, it is trading 0.63 percent below its 52-week high and 79.84 percent above its 52-week low.

Market capitalisation stands at Rs 28,429.54 crore.

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Mahindra & Mahindra Financial Services - 140922 - khan