Buy Mahindra and Mahindra Financial; target of Rs 335: Motilal Oswal

Motilal Oswal's research report on Mahindra and Mahindra Financial

Mahindra & Mahindra Financial’s (MMFS) 4QFY25 PAT declined ~9% YoY to ~INR5.63b (in line), while FY25 PAT grew ~33% YoY to INR23.4b. NII in 4QFY25 stood at INR19.3b (in line) and grew ~6% YoY. Other income rose ~43% YoY to ~INR2.3b, aided by healthy improvement in fee income. NIM (calc.) contracted ~15bp QoQ to ~6.6%, primarily due to yield compression, which also reflected the impact of a one-time calibration in the computation of interest income. Annualized credit costs stood at ~1.6% (PQ: ~3bp and PY: ~1.4%). Opex stood at ~INR9.4b (up ~18% YoY) and the cost-income ratio stood at ~44% (PQ: ~42% and PY: ~40.5%). Management indicated that a few oneoff expenses in 4Q contributed to elevated opex during the quarter. PPoP stood at ~INR12.1b (~5% miss) and grew ~3% YoY.

Outlook

We estimate a ~24% PAT CAGR over FY25-FY27E, with FY27E RoA/RoE of 2.2%/16%. Reiterate BUY with a TP of INR335 (based on 1.7x Mar’27E BVPS).

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