M&M Finance Reports Strong Q3 Results; Share Price Jumps Over 5%

Mahindra & Mahindra Financial Services (M&M Finance) has experienced a 5% increase in its stock price following the release of its Q3 results, surpassing market projections. The company’s net interest income (NII) for Q3FY24 increased by 10% to ₹1,815 crore from ₹1,650 crore in the previous year, accompanied by a net interest margin (NIM) of 6.8%. Despite a 12% decrease in standalone net profit to ₹553 crore, the company’s performance has been well-received by investors.

In the quarter ending December 2023, M&M Finance witnessed a 7% year-on-year rise in disbursements, amounting to ₹15,436 crore, while maintaining a collection efficiency of 95%. The company also saw an enhancement in its asset quality, with stage 3 assets at 4.0% and stage 2 at approximately 6%. This robust performance has led to brokerage firms revising their target price on the stock.

Nuvama Institutional Equities expressed optimism regarding M&M Finance’s Q3 results, citing growth in disbursals and assets under management (AUM). They adjusted their earnings estimates and upgraded the stock to a ‘Hold’ rating. Similarly, JM Financial noted that the company’s lower credit costs and improved NIM contributed to higher-than-anticipated profits for Q3, and recommended a ‘Buy’ on the stock.

Motilal Oswal Financial Services conveyed their confidence in M&M Finance’s future, acknowledging the company’s transition towards a more sustainable NIM profile. They reiterated their ‘Buy’ rating on the stock and raised the target price to ₹340 per share. Centrum Broking also expressed a positive outlook, with expectations of growth tapering down to 22% in the next quarter and 17% in the following year. They maintained an ‘Add’ recommendation and raised the target price to ₹306 per share.

Emkay Global Financial Services highlighted M&M Finance’s strong Q3 performance, forecasting sustained improvement in profitability over the coming quarters, despite maintaining a ‘Reduce’ rating on the stock. Over the past three months, the company’s shares have increased by over 18% and by more than 24% in the last year, indicating a favorable sentiment towards its future performance.

As of 10:20 am, M&M Finance’s share price was trading 3.64% higher at ₹290.15 apiece on the BSE. It is important to note that the views and recommendations mentioned above are those of individual analysts or broking companies, and not of Mint. Therefore, investors are advised to consult with certified experts before making any investment decisions.

In conclusion, the positive reception to M&M Finance’s Q3 results has positioned the company as a strong contender in the financial services sector, with expectations of sustained growth and improved profitability in the future.