Mahindra Finance, M&M Financial Services, Mahindra Group: Mahindra & Mahindra (M&M) Financial Services share price touched a fresh 52-week high of Rs 243.60 apiece, after surging by around 6.5 per cent on the BSE intraday during Monday’s trading session. The stock of M&M Group’s financial arm breached its earlier high of Rs 235, hit on September 15, 2022.  

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The buying sentiment in M&M Financial shares can mainly be attributed to healthy a disbursement in November and the year-to-date period - in an otherwise weak market.

M&M Financial, in its filing on Friday, December 2, 2022, announced that the company has recorded a disbursement of approximately Rs 4,500 crore in November 2022, delivering a 75 per cent year-on-year (YoY) growth, on the backdrop of a positive macro environment. 

The financial company's year-to-date (YTD) disbursement stood at approximately Rs 31,050 crore, registered a YoY growth of 99 per cent. Healthy disbursement trends have led to a strong gross asset book of approximately Rs 76,300 crore, growing around 3.4 per cent over September 2022.  

This has resulted in a growth of approximately 17.5 per cent compared to March 2022, the company further said in the exchange filing. The collection efficiency (CE) was at 96 per cent for November 2022 as compared to 94 per cent recorded in the same period last year, the release also added. 

M&M Financial said that the stage 2 assets as of November end experienced a sequential reduction compared to October 2022 and is estimated below 9 per cent, while stage 3 assets remained stable at lower than 7 per cent as of month end.  

The company expects further improvement in stage 2 and stage 3 assets during December 2022, it added. 

At the close, the stock quoted Rs 241.10 apiece, up by over 5 per cent. The counter in the last five sessions has jumped nearly 13 per cent.

Mahindra Finance Share Price Target

Domestic brokerage firm Sharekhan maintained a Buy stance on Mahindra & Mahindra Financial Services with a target price of Rs 275 apiece or a 12 per cent upside. The brokerage said that it believes the non-banking finance company (NBFC) to report healthy disbursement numbers and exhibit strong underlying demand.

“Asset quality metrics are expected to improve further on the back of strong collection efficiency. Additionally, it plans to diversify its growth engines and increase its non-vehicle financing share in SME (Small and Medium Enterprise), LAP (Loan Against Property), and digital segment,” it said. 

The brokerage believes the earnings trajectory is going to positively surprise going forward led by strong business growth and moderation in credit cost. At the current market price, M&M Financial trades at 1.9x and 1.7x of FY23E and FY24E ABV.