Mahindra & Mahindra Financial Services (MMFS IN) – Q1FY27 Result Update – Growth picking up aided by a stable margin profile – ACCUMULATE
Published on 22 Jul 2026
Q1 disbursement growth picked up to 22% YoY led by tractor, PV and Used CV. AUM grew 13% YoY to INR1,374.5bn; we build 13%/ 15% 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; productivity improvement to be offset by investments in digital transformation. Asset quality trend was flat QoQ; we remain watchful and build a credit cost of 1.7%/ 1.6% for FY27/ FY28E. We increase our FY27/28E earnings by 2-5%, factoring a strong growth in tractor and stable margin trajectory. We value the standalone business of MMFS at 1.5x FY28E P/ABV (vs. 1.4x earlier). Our SOTP ascribes a valuation of INR364 for the standalone business and INR21 for subsidiaries, with a 25% Holding Co. discount, to arrive at a TP of INR380. While disbursement run-rate has picked up, monsoon-related headwinds likely to be a challenge. Maintain ACCUMULATE.
