Sharekhan's research report on Mahindra and Mahindra Financial Services
M&M Finance reported strong profitability in Q3 at Rs. 553 crore (11% higher than our estimate) driven by significant decline in credit cost and higher other income. Credit cost (cal) reduced to 1.4% (vs 2.8% q-o-q) due to write-back of provisions. Gross stage 3 and stage 2 assets remained sequentially flat at 10% of AUM. NII grew by 7.0% q-o-q (vs 0.2% on q-o-q basis) on healthy NIM. NIM (cal) rose to 7.1% (7.0% q-o-q) driven by increase in yield on loans.
Outlook
At CMP, the stock trades at 1.7x/1.5x FY2025E/FY2026E BV estimates. We maintain Buy on M&M Finance with an unchanged TP of Rs. 345.
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