The brokerage firm InCred in a research report said that Mahindra & Mahindra Financial Services’ asset quality has improved consistently. Also, the company’s assets under management grew significantly without any compromise. The company has kept the rating unchanged to “Add” and maintained the target price at Rs 370 per share.
The company’s AUM grew 24% on year to Rs 1 lakh crore which was led by strong disbursement growth and relatively lower repayments for quarter. Its AUM grew 6% sequentially.
In the third quarter, the company’s disbursement increased 11% on year but fell 1% on quarter to Rs 153 billion. Monthly, in January it grew 11%, in February 13%, and in March it was 11% year-on-year.
“Our recent interaction with the management indicated healthy demand momentum in all segments barring tractor,” said InCred in its research report.
According to the brokerage house, slowing growth and deterioration in asset quality are key risks for the company.
“We retain our high-conviction Add rating on MMFS with a target price of Rs370, as we have valued the standalone entity at ~2.2x FY25F BV and added Rs20/share for its subsidiaries,” said InCred Equities.
Further, the gross non-performing asset came down to 3.3% from 4% during the same period a year ago. Gross NPA has been improving for the past seven quarters consistently.