Buy Mahindra and Mahindra Financial; target of Rs 310: Motilal Oswal

Motilal Oswal's research report on Mahindra and Mahindra Financial

Mahindra & Mahindra Financial’s (MMFS) 1QFY26 PAT rose ~3% YoY to ~INR5.3b (in line). NII in 1QFY26 stood at INR20.1b (in line) and grew ~13% YoY. Other income rose ~85% YoY to ~INR2.7b, driven by healthy fee income and dividend income of INR464m received during the quarter from Mahindra Insurance Brokers (MIBL; 100% subsidiary of MMFS). NIM (calc.) rose ~10bp QoQ to ~6.7%. Opex stood at ~INR9.3b (up ~17% YoY) and the cost-income ratio stood at ~41% (PQ: ~44% and PY: ~41%). PPoP stood at ~INR13.5b (in line) and grew ~19% YoY. Credit costs stood at ~INR6.6b (~9% higher than MOFSLe). Annualized credit costs stood at ~2.2% (PQ: ~1.6% and PY: ~1.7%). Collection efficiency improved marginally to ~95% (PY: 94%) in 1QFY26. CRAR stood at ~20.6% (Tier 1: 17.9%) as of Jun’25, after incorporating the Rights Issue concluded in the quarter.

Outlook

We estimate a ~21% PAT CAGR over FY25- FY27E, with FY27E RoA/RoE of 2.2%/13%. Reiterate BUY with a TP of INR310 (based on 1.6x Mar’27E BVPS).