Mahindra & Mahindra Financial Services, incorporated in 1991, is a large capitalization company (having a market capitalization of Rs 22529.89 crore) operating in the NBFC sector.
Mahindra & Mahindra Financial Services major revenue/segments include interest, fee and commission income, income from the sale of stocks and securities, rental income and dividends for the year ended. ending March 31, 2021.
For the quarter ended 31-03-2022, the company reported consolidated total revenue of Rs 2897.44 crore, down -2.95% from last quarter, total revenue of Rs 2985.65 crore and a decrease of -4.64% compared to last year in the same quarter. Total income of Rs 3038.37 crores. The company reported a net profit after tax of Rs 622.42 crore last quarter.
Mahindra Finance (MMFS) announced a PAT of Rs 6 billion (+301% yoy / -33%% qoq) in Q4FY22, in line with the brokerage’s estimates. Net interest income was impacted by the cancellation of excess return of ~Rs 1.43 billion charged to customers. Operating expenses remained high due to continued investment in the business. Given the easing of the implementation of the RBI IRACP guidelines until September 2022, the company reversed 106% of the provision made in Q1FY22. Its aggressive repossession strategy resulted in the repossession of approximately 55,000 vehicles in FY22, resulting in the write-off of approximately 3.9% of FY21 assets under management in FY22. exercise 22.
MMFS seeks to leverage the “Mahindra” ecosystem by providing financing, investment and insurance solutions in rural and semi-urban markets. MMFS is a play on the booming credit demand of underserved rural/semi-urban India.
The brokerage retained its Hold rating on the stock with a revised target price of Rs205 in March 2023 (from Rs190), valuing the business at 1.3x Mar’24E BVPS, using the excess return method equity (ERE) for FY23E- RoE 24E of 14.5%. “While we are increasing our cost of equity to 13.75% from 13.25%, we are also factoring in a moderately higher AUM CAGR of 15% on our FY22-24E and beyond from 12% earlier. “As a result, our implied P/BV multiple drops from 1.2x to 1.3x on FY24E BVPS. Given the improving growth outlook, we are raising our forward estimates,” the brokerage said. Elevated stress on the balance sheet presents downside risks to valuation, while upside risks include a faster-than-expected recovery in growth and market share gains in the target market, he said. added.
The promoters held 52.16% of the company’s capital as of March 31, 2022, while the FIIs held 18.28% and the DIIs 15.77%.
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