Mahindra & Mahindra Financial Services Ltd., incorporated in the year 1991, is a Large Cap company (having a market cap of Rs 18125.22 Crore) operating in NBFC sector.
Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 2566.84 Crore, down -15.52 % from last quarter Total Income of Rs 3038.37 Crore and down -16.35 % from last year same quarter Total Income of Rs 3068.68 Crore. Company reported net profit after tax of Rs -1590.29 Crore in latest quarter.
Investment Rationale
Macro-economic situation remains highly volatile led by challenges posed by COVID. Management focused on recognizing pain upfront rather than restructuring, which led to high credit cost in the quarter. Rural economy still remains resilient and we expect significant recovery from NPA recognized in 1QFY22. Nevertheless, on a low ROA profile, even a marginal tweaking in NIMs or credit cost is leading to significant volatility in estimated profits. The brokerage remains conservative and cut estimates sharply for FY22E to factor in up-fronting of provisioning expenses. If there is no incremental pain due to COVID then it might as well see upgrades going forward. While RoE is likely to remain subdued at ~5% in FY22E, it should touch ~15% in FY23E. It maintains Buy rating with a TP of INR175 per share (1.3x FY23E BVPS).
Promoter/FII Holdings
Promoters held 52.2 per cent stake in the company as of June 30, 2021, while FIIs held 18.2 per cent, DIIs 16.5 per cent and public and others 13.1 per cent.
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