Mahindra Group's NBFC Stock Slumps Despite Healthy Growth Metrics: Why Analysts Are Reducing Targets
Take Stock Of The Week Ahead

Get all the latest Share Market trends and news to set you up for the week ahead.

Congratulations!
You have successfully subscribed.

Mahindra & Mahindra Financial Services shares were trading lower after the NBFC subsidiary of the Mahindra Group reported a net profit of ₹619 crore for the March quarter, marking a 9.5% decline from ₹684 crore in the same period last year.

What Happened: Despite the decline in profit, the non-bank lender saw a significant rise in its net interest income, which increased by 21% year-on-year to ₹3,706.10 crore.

The company experienced robust loan growth with total assets growing 24% year-on-year to ₹1.02 lakh crore. Disbursements for the quarter also rose by 11% to ₹15,292 crore. In April, Mahindra & Mahindra Financial Services disclosed that overall disbursements reached about ₹3,930 crore, a 4% increase from the previous year. However, its collection efficiency dropped to 89% from 92% year-on-year.

The scheduled reporting of the company's results was delayed due to a fraud discovered at one of its branches in the Northeast, which impacted the profits for the quarter and the fiscal year ending March 31, 2024.

See also: Why Godrej Consumer Shares Hit All-Time High Even After Reporting ₹1,893 Cr Loss In Q4

Analyst reactions: Brokerage firm Citi maintained a ‘neutral’ stance on Mahindra & Mahindra Financial Services but reduced its target price to ₹290 per share from ₹315, citing the quarter’s aggressive write-offs of ₹600 crore and a fraud provision of ₹136 crore at the Mizoram branch. Despite these setbacks, the firm noted an unexpected increase in net interest margins by 30 basis points quarter-over-quarter to 7.1%, supported by strong fee income and controlled operational expense growth.

Nomura gave a ‘reduce’ call with a target price of ₹240 per share, pointing to a challenging quarter and a weak near-term outlook.

Meanwhile, Jefferies held its rating but reduced its target price to ₹294 per share, acknowledging the impact of the ₹140 crore fraud on quarterly profits, while stating the fraud was an isolated event and adjusting its FY25 return on assets aspiration to 2.2%.

Price Action: Shares of Mahindra & Mahindra Financial Services were down 1.69% to trade at ₹255.50 on Tuesday.

Read next: Railway Stock Soars 6% As Brokerage Initiates Coverage, Sees 24% Upside Ahead

Don't miss a beat on the share market. Get real-time updates on top stock movers and trading ideas on Benzinga India Telegram channel.

Comments
Loading...
EarningsNewsPrice TargetAnalyst RatingsMoversTrading IdeasMahindra & Mahindra Financial Services