ICICI Direct's research report on Mahindra and Mahindra Financial Services
Mahindra & Mahindra Financial Services (MMFS) reported a weak performance with provision related to Covid impacting earnings. Advances growth stayed subdued at ~6.1% YoY to Rs 64993 crore, led by auto volume slowdown. Disbursement fell 21% YoY, led by 59% fall in CV, 25% decline in cars and 10% decline each in auto/ tractors. Gross spread saw a decline of ~40 bps YoY to 7.7%, led by a decline in yields and higher cost of funds.
Hence, we revise our estimates downwards for FY21-22E. Thus, we lower our target price to Rs 160, valuing core auto business at ~1.5x FY22E ABV and ~Rs 21 as value for subsidiaries (post assuming 20% holding company discount). We maintain HOLD rating.
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