Mahindra & Mahindra Financial Services (MMFS IN) – Q4FY26 Result Update – Steady growth outlook, asset quality monitorable – ACCUMULATE
Published on 25 Apr 2026
Q4 disbursement growth picked up to 11% YoY led by growth in tractor, Used CV and PV. AUM grew 12% YoY to Rs1,341bn; we build 13%/ 13.5% for FY27/ FY28E. While bond yields have hardened resulting in a higher CoF, expect FY27 margins to be stable aided by a favourable mix and increase in fee-based income. Opex cost is expected to remain range-bound as the company invests in business transformation/ diversification. Asset quality trend showed an improvement; we remain watchful and build a credit cost of 1.7%/ 1.6% for FY27/ FY28E. We cut FY27/28E earnings by 6-7%, factoring a slowdown in growth and higher than anticipated cost of borrowing. We value the standalone business of MMFS at 1.3x FY28E P/ABV. Our SOTP ascribes a valuation of Rs 309 for the standalone business and Rs 21 for subsidiaries, with a 25% Holding Co. discount, to arrive at a TP of Rs 325. While disbursement run-rate has picked up, asset quality continues to be a monitorable. Maintain ACCUMULATE.
