Hold Mahindra & Mahindra Financial; target of Rs 384: Edelweiss

Edelweiss' research report on Mahindra & Mahindra Financial
Mahindra & Mahindra Financial Services’ (MMFS) Q1FY18 PAT of INR474mn was lower than our estimate. The miss was on account of higher credit costs, which included INR834mn of provisions pertaining to loans that were >24 months overdue (reversal of write-back in Q1FY17). GNPAs, in line with historical trend, rose to 10.5% (9.0% in FY17), though management highlighted that collection efficiency in all verticals, except tractors, improved vis-à-vis Q1FY17.

Outlook

The stock trades at 3.6x FY19E P/ABV, which factors in a fair bit of positive momentum. We maintain ‘HOLD/SU’ with TP of INR384 (3.5x FY19E P/ABV).

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