M&M Financial Services posts better-than-estimated Q3 numbers; what should investors do?

Shares of Mahindra and Mahindra Financial Services jumped over 5 per cent on BSE in the morning deals on Wednesday (January 31). The stock was in demand as the company posted better-than-estimated Q3 results.

At 9:42 a.m., shares of M&M Financial Services traded 3.7 per cent, or Rs 10.35, higher on the BSE at Rs 290.3 apiece. The market capitalisation of the company at around the same time stood at Rs 35,972.45 crore.

M&M Financial Services Q3 numbers

The non-banking lender focused on auto finance reported a standalone net profit of Rs 552.8 crore against Rs 629 crore, which was a decline of 12.1 per cent. The profit for the third quarter was estimated at Rs 490 crore.

The gross non-performing asset (GNPA) declined to 3.97 per cent against 4.29 per cent quarter-on-quarter (QoQ), which was estimated at 4 per cent. The net non-performing asset (NNPA) also slid to 1.52 per cent from 1.71 per cent QoQ, which was estimated at 1.7 per cent. The net interest margin (NIM) increased to 6.8 per cent from 6.5 per cent QoQ, which was estimated at 6.55 per cent.

M&M Financial Services management commentary

The company's management cut its NIM guidance to 7 per cent from 7.5 per cent and expects slower disbursement growth going ahead.

Should you buy, sell, or hold?

CLSA maintained 'buy' and raised the target to Rs 360 from Rs 330 apiece. Morgan Stanley has reiterated its 'equal weight' rating and raised the target to Rs 300 from Rs 285 apiece earlier.

Meanwhile, Citi maintained a 'neutral' stance and raised the target to Rs 315 from Rs 310 apiece. Similarly, Jefferies maintained a 'hold' and cut the target to Rs 300 from Rs 295 apiece.

JP Morgan continued with an 'underweight' stance and gave the target of Rs 260 apiece.

M&M Financial Services share price: Past performance

In a year, the stock has gained over 24 per cent against the Nifty50's rise of over 22 per cent.

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