Broker’s call: M&M Financial (Buy)

Target: ₹330

CMP: ₹285.55

Mahindra & Mahindra Financial Services’ Q3FY25 PAT at ₹900 crore beat estimates on negligible credit costs due to provision write-back on past portfolio (non-recurring). NII growth was largely in line with the estimates. Disbursements picked up aided by PV and tractors, leading to a steady AUM growth.

Asset quality was stable, and the management has guided for sustainable credit costs. New partnerships will benefit fees and with improving operating leverage, we expect RoA/ RoE of 2 per cent/ 14 per cent by FY27E. Tier I at 15 per cent is low and it will look to raise capital in the near term.

SME is growing on a low base. Pre-owned segment was muted, which was a surprise but the management is strengthening the team to accelerate growth in this segment. In the PV segment, it will continue to look for premiumisation and has partnered with M&M for financing new EVs.

The management continues to be cautious on the CV segment. AUM growth was steady at and SME is beginning to pick up pace.

. Tractor NPAs improved, as envisaged.

NIM has benefitted from improving yields (20 bps) on better loan yields and rising fee income. Cost of funds inched up on repricing of liabilities. NIM is likely to remain at similar levels, and the management has guided for about 7 per cent NIM in the medium term.