Buy Mahindra and Mahindra Financial Services; target of Rs 300: Sharekhan

Sharekhan's research report on Mahindra and Mahindra Financial Services

Net earnings met estimates, driven by robust growth in other income, partially offset by above higher credit costs. NIMs beat estimates as yield on AUM rose. GS-3 assets surged 29/16 bps (y-o-y/q-o-q) caused by stress in the the CV segment and seasonality, leading for significantly rise in the credit costs. AUM growth was healthy, however, disbursements dropped 17.5% q-o-q on weak demand in the auto segment and non-seasonality factors. Tractor disbursements grew robustly. At CMP, the stock trades at 1.4x /1.3x its FY2026E/FY2027E BV, respectively.

Outlook

We continue to maintain buy ratings with unchanged PT of Rs. 300 on healthy growth in net earnings driven by expansion in NIMs, lower Opex/AUM, growth in other income, and reasonable valuation.

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