Buy Mahindra and Mahindra Financial; target of Rs 400: Motilal Oswal

Motilal Oswal's research report on Mahindra and Mahindra Financial

Aspirational target to deliver an 18-20% AUM CAGR and RoA of 2.2%-2.5% We attended the Mahindra Group’s Investor Day, where MMFS outlined its strategic roadmap, detailing its growth ambitions, credit cost trajectory, RoA targets, and the key business segments and focus areas that will anchor its next phase of expansion. MMFS shared its long-term aspiration to position itself as the most trusted financial services partner for Bharat, leveraging its over three-decade operating history, deep rural presence across 500k villages, and a 12m strong customer base. This ambition is anchored by a target of scaling the loan book to ~INR3t by 2030. Management highlighted the meaningful progress achieved during the 2022-2025 rebuild phase, following earlier periods of high-growth but volatile asset quality. Over the last three years, MMFS has strengthened its underwriting architecture, institutionalized AI-driven collections, enhanced risk governance, and consistently maintained GS3 below 4%.

Outlook

MMFS currently trades at 1.8x FY27E P/BV and 14x FY27E P/E. With a projected PAT CAGR of ~19% over FY25-FY28E and RoA/RoE of 2.2%/14% in FY28E, we reiterate our BUY rating with a TP of INR400 (based on 2x Sep’27E BV).

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