Buy Mahindra and Mahindra Financial; target of Rs 235: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Mahindra and Mahindra Financial

Mahindra Finance (MMFS) has demonstrated utmost seriousness in overcoming its weaknesses that led to a lot of volatility in its reported margins, asset quality and credit costs. MMFS has also embarked on a few other strategic initiatives, which will help it: a) improve productivity, bring efficiencies and reduce the operating cost ratios, b) target the affluent rural and semi-urban (RUSU) customer segment with relevant lifecycle products, and c) leverage analytics and business intelligence to mitigate various risks and improve both business volumes as well as collections. We believe that MMFS will benefit from its parent Mahindra & Mahindra (M&M)’s strong recovery in auto volumes. We model an AUM/ PAT CAGR of 13%/27% over FY22-FY24E for an RoA/RoE of 1.8%/9.6% in FY24E, respectively. We recently included MMFS in our model portfolio.

Outlook

We retain our BUY rating on the stock with a TP of INR235 (premised on 1.7x FY24E P/BV). Key risk to our call: potential volatility in asset quality and credit costs after the implementation of the RBI NPA circular from Oct’22 onwards.

More Info

At 17:30 Mahindra & Mahindra Financial Services was quoting at Rs 208.95, up Rs 4.75, or 2.33 percent.

It has touched an intraday high of Rs 209.65 and an intraday low of Rs 203.00.

It was trading with volumes of 218,790 shares, compared to its thirty day average of 184,930 shares, an increase of 18.31 percent.

In the previous trading session, the share closed down 1.57 percent or Rs 3.25 at Rs 204.20.

The share touched its 52-week high Rs 209.65 and 52-week low Rs 127.95 on 21 July, 2022 and 07 March, 2022, respectively.

Currently, it is trading 0.33 percent below its 52-week high and 63.31 percent above its 52-week low.

Market capitalisation stands at Rs 25,816.40 crore.

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Mahindra & Mahindra Financial - 210722 - moti