M&M Finance's June disbursement rises 3%; what should investors do?

M&M Financial Services shares declined on Wednesday (July 3) in the morning deals after announcing its June update on Tuesday after market hours. 

At around 9:56 a.m., shares of M&M Finance were down 0.89 per cent on BSE at Rs 299.5.

In the regulatory filing, the NBFC expects an overall disbursement of approximately Rs 4,370 crore, which implies a three per cent year-on-year (YoY) growth in June.

As per the company, Q1FY25 disbursement is likely at about Rs 12,730 crore, a five per cent growth YoY.

Further, as per the filing, business assets grew approximately by four per cent at Rs 1,06,200 crore over March 2024 and 22 per cent over June 2023. 

Moreover, the Collection Efficiency (CE) was at 95 per cent for June 2024 against 96 per cent a year ago. 

For Q1FY25, the CE is estimated at 94 per cent. Meanwhile, the company continued to enjoy a comfortable liquidity position on its balance sheet, with a liquidity chest of over Rs. 8,000 crore.

What should investors do? 

Morgan Stanley maintained an 'equalweight' rating on the stock and raised the target to Rs 300 from Rs 280. Meanwhile, Jefferies continued with 'hold' and gave a target of Rs 294.

Citi maintained a 'neutral' rating and gave a target of Rs 310. As per the report, June disbursements/business assets growth are broadly in line with estimates. 

"We bake-in credit cost of nearly 2.4 per cent for Q1 and estimate RoA of 1.5 per cent net interest margins (NIM) are anticipated to moderate," said Citi.

Similarly, Nomura maintained an 'underperform' rating and gave a target of Rs 240.

M&M Finance share price: Past performance 

In a year, shares of M&M Finance declined over 12 per cent against Nifty50's rise of over 24 per cent.

In five years, shares of M&M Finance have given over 24 per cent returns against Nifty50's rise of 104 per cent.

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