M&M Financial Shares Plunge 7.5% After Third Quarter Earnings; Here’s what the brokers are saying


Shares of Mahindra and Mahinda Financial Services started the session on a negative note on Thursday and fell 7.5% in intraday trading after the company reported results for the December quarter.

The company reported consolidated net profit of Rs 992 crore for the fiscal third quarter, down 10% from Rs 1,103 crore in the September 2021 quarter. On a stand-alone basis, net profit was to Rs 894 crore in the quarter, compared to a loss of Rs 274 crore a year ago, according to the company’s statement.

Mahindra Finance, which caters to rural and semi-urban customers for the purchase of new and used motor and utility vehicles, saw its loan disbursements increase by 28% from October to December. There is sequential growth in the loan portfolio in the current quarter and the company expects further increase in disbursements, he said, adding that collection efficiency stood at 95% for quarter and 100% in December.

Net interest income at Rs 1,580 crore was up 14% year-on-year, reflecting the widening spread, the company said.

Global brokerage CLSA has an outperformance call on the stock with a target price of Rs 240 per share. The brokerage sees a 50% rise in the stock, which was listed at Rs 158.75 on BSE at the time of writing.

CLSA reduced the FY22 earnings estimate by 42% due to a one-time event, FY23 by 2% and FY24 by 6%. There will be a one-time impact on credit costs in the fourth quarter on RBI standards for recognition of NPLs, he said.

On the December quarter numbers, the brokerage said, the third quarter was a continuation of the recovery cycle that began in the second quarter.

Meanwhile, Macquarie said M&M Financial was hit hardest among its peers by RBI’s new NPL standards. It maintained a “neutral” rating with a target price cut to Rs 175 per share.

According to Macquarie, Mahindra Finance shares have no short-term triggers, but the valuation is undemanding. Short-term provisions could remain high, he said. The brokerage cut its FY22 EPS (earnings per share) estimate by 77% to account for the large first-half loss.

As of 12:40 p.m., Mahindra Finance shares were trading down 6.01% at Rs 158.60 on BSE and down 6.01% on NSE also at Rs 158.85.


Comments are closed.