M&M Finance shares fell 7% to an intra-day low of Rs 300 after the company’s quarterly business update. Its overall disbursement is estimated to fall by 1% on year to Rs 13,160 crore in Q2 of FY25 and rise in stage-2 assets. 

It is expecting the stage-2 assets to rise to 6.4% as of September 2024 compared to 5.7% a year ago as of September 30. The stage 2 assets are when loans are overdue by 31-89 days

However, the company expects the disbursement to show a growth of 2% on year to Rs 25,900 in the first half of FY25. 

M&M Finance reported that its business assets grew by 20% on year to Rs 1.12 lakh crore in Q2 FY24. Also, the company’s stage-3 loan percentage has come down to 3.8% as of September 30, 2024, compared to 4.3% as of September 30, 2023. 

“The company continued to enjoy a comfortable liquidity position on its Balance Sheet, with a liquidity chest of over Rs. 8,500 crore,” said the company in an exchange filing. 

Emkay Global on M&M Finance 

“Mahindra Finance is a potential candidate to benefit from a possible rural-agri revival, without having any exposure to the MFI segment. However, the fundamental RoA improvement for M&M Finance is a gradual story,” said Emkay Global in a research report. The brokerage house has a ‘Reduce” rating on the stock. 

The company’s business assets grew 6% sequentially and 20% yearly to Rs 112.6 crore on the back of good monsoons and strong rural recovery, said Emkay Global. 

“We expect NIMs to remain flat on account of stable yield and CoFs. We expect PPOP to come to Rs1190 crore, growing 25% YoY,” said the brokerage house. 

Also, the brokerage house expects the credit costs are expected to increase by 13 bps sequentially on account of higher slippages. 

Previously in Q1 FY25, Mahindra and Mahindra Financial Services recorded a net profit of Rs 513 crore, up by 45% on year, against Rs 352.7 crore reported a year ago in the same period. 

The NBFC’s net interest income stood at Rs 1,894 crore, an increase of 16% on a yearly basis compared to Rs 1,634 crore posted in the same quarter a year ago.

M&M Finance Vs Nifty 50

Shares of M&M Finance fell over 10% in the last five trading sessions and 6% in the past month. However, the stock gave a return of 3.5% in the last six months and over 5% in the past year. 

To compare, the Nifty 50 has fallen 4.5% and erased the gains of the past month as well. The index has delivered a return of almost 12% in the past six months and 29% in the last year.