Asset quality volatility historically has been the concern for Mahindra Finance; However, management has taken steps to bring the stability over the period.
NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
IDBI Capital Report
Mahindra and Mahindra Financial Services Ltd. reported improvement in net interest margins led by increase in yield on assets. Management guided for NIMs to remain around 6.5 -6.7% range for FY25 while improve to 7% in longer term.
Asset quality remain stable with GS3 at 3.9% vs 3.8% QoQ led by higher write offs. Q4 generally is strong quarter with respect to collections. AUM growth slowed down to 19% YoY (20% YoY Q2FY25) led by lower disbursements; we expect 16% CAGR (FY25-27E).
Net interest income grew by 18% YoY led by decline in NIMs. Pre-provision operating profit grew by 15% YoY led by lower other income (down 96% YoY). However, PAT increased by 63% YoY led by lower provisions (down 97% YoY). Thus, RoA improved to 2% (9M FY25) versus 1.5% (9M FY24) in line with guidance of 1.8-2.0% FY25.
We have rolled over to FY27 estimates. We upgrade to BUY with new target price of Rs 325 (earlier Rs 315) valuing it at 1.8X FY27E adjusted book value.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
. Read more on Research Reports by NDTV Profit.Rural economy growth is expected to improve with better rainfall and steps by the government which should support Mahindra Finance. Read MoreResearch Reports
NDTV Profit
