Mahindra & Mahindra Financial Services (MMFS IN) – Q3FY26 Result Update – Disbursements pick up; asset quality monitorable – Accumulate
Published on 29 Jan 2026
Q3 disbursement growth picked up to 7% YoY led by growth in tractor, CV and PV. AUM grew 12% YoY to Rs1,289.6bn; we build 13.5%/ 14% for FY26/ FY27E led by growth in tractor and diversification across non-VF portfolio (mortgage and MSME). Expect FY27 spread to improve aided by a favourable mix, boost in fee income and lower CoF. Opex cost to be elevated as the company invests in business transformation/ diversification. Asset quality trend showed a slight improvement; we remain watchful and build a credit cost of 1.9%/ 1.8% for FY26/ FY27E. We value the standalone business of MMFS at 1.6x Dec-27E P/ABV. Our SOTP ascribes a valuation of Rs 379 for the standalone business and Rs 16 for subsidiaries, with a 25% Holding Co. discount, to arrive at a TP of Rs 395. While disbursement run-rate has picked up, asset quality continues to be a monitorable. Maintain ACCUMULATE.
