Buy Mahindra and Mahindra Financial Services; target of Rs 290: Sharekhan

Sharekhan's research report on Mahindra and Mahindra Financial Services

M&M Financial Services Limited (MMFSL) reported healthy disbursement numbers for February 2023, up 53% y-o-y/5% m-o-m at Rs. 4,185 crore, driven by strong credit demand trends. Disbursements growth is expected to moderate going forward due to a higher base in the trailing 12 months; however, there are no demand concerns. Loan book grew by 1.5% m-o-m. Collection efficiency remained broadly stable y-o-y as well as m-o-m at 97%. Gross stage-2 assets saw a sequential improvement m-o-m, while gross stage-3 assets remained stable m-o-m.

Outlook

At the CMP, the stock trades at 1.7x/1.4x its FY2024E/FY2025E ABV, respectively. We reiterate Buy with an unchanged PT of Rs. 290.