Buy Mahindra and Mahindra Financial; target of Rs 320: Motilal Oswal

Motilal Oswal is bullish on Mahindra and Mahindra Financial recommended buy rating on the stock with a target price of Rs 320 in its research report dated April 30, 2023.

Broker Research

May 02, 2023 / 15:01 IST

buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Mahindra and Mahindra Financial

Mahindra & Mahindra Financial (MMFS) reported strong earnings beat with 4QFY23 PAT of INR6.8b, which grew 14% YoY. The growth was aided by a sharp improvement in asset quality that translated into almost NIL credit costs despite write-offs of ~INR6b during the quarter. FY23 PAT of ~INR19.8b grew ~101% YoY. FY23 credit costs stood at 1.35% while RoA/RoE stood at 2.3%/13.0%. MMFS has made a good progress towards its Mission 2025 targets across AUM growth, asset quality, NIM and RoA. With process enhancements across sourcing, underwriting and collections, we expect the asset quality improvement to sustain and now model lower credit costs of ~1.7%/1.9% in FY24/FY25. Margin compression (in a rising rate environment) can be partly mitigated by the change in product mix.

Outlook

MMFS currently trades at 1.6x FY25E P/BV. For a PAT CAGR of 19% over FY23- FY25E and FY25 RoA/RoE of 2.3%/15%, we reiterate our BUY rating with a TP of INR320 (based on 2.0x FY25E BVPS).

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