Buy Mahindra and Mahindra Financial; target of Rs 285: Motilal Oswal

Motilal Oswal is bullish on Mahindra and Mahindra Financial recommended buy rating on the stock with a target price of Rs 285 in its research report dated March 31, 2023.

Broker Research

April 18, 2023 / 11:54 IST

Buy

26 Aug, 2025 12:21

Volume

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Motilal Oswal's research report on Mahindra and Mahindra Financial

Mahindra Finance (MMFS) has over the last 18 months embarked on multiple strategic initiatives, which we believe will lead to 1) lower operating cost ratios through improved productivity aided by higher efficiencies, 2) sustainable improvement in asset quality resulting in lower credit costs, 3) much better risk management by leveraging analytics/business intelligence, and 4) improvement in business volumes by targeting the affluent rural and semi-urban (RUSU) customer segment with relevant lifecycle products. Rural demand, which is already showing green-shoots of revival, should improve further, driven by higher rural spending (in the year leading up to the general elections), improvement in mining activity and the opening up of the contracting segment. A better minimum support price (MSP) and better agri yields for customers in the agri ecosystem should result in healthy rural cash-flows and would help to sustain demand even beyond the narrative of general elections.

Outlook

We model an AUM/PAT CAGR of 18%/17% over FY23-FY25E with an RoA/RoE of 2.0%/13% in FY25E. We retain our BUY rating on the stock with a TP of INR285 (premised on 1.8x FY25E P/BV). Key risk to our call: external disruptions like COVID waves leading to volatility in asset quality and credit costs.

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