Mahindra & Mahindra Financial Services (MMFS IN) – Q2FY26 Result Update – Disbursements to pick up; asset quality trend weak – HOLD
Published on 29 Oct 2025
Q2 disbursement growth was muted due to weakness in the CV portfolio; expect disbursements to pick up in H2 with a strong uptick in tractor and PV volumes. AUM grew 13% YoY to Rs 1,272.5 bn; we build 15% for FY26E. Expect spread to improve aided by a favourable mix, boost in fee income and lower CoF. Opex costs to be elevated as the company invests in business transformation. Asset quality trend continues to be weak; we remain watchful and build higher credit cost (1.9% for FY26). We value the standalone business of MMFS at 1.3x Sep-27E P/ABV. Our SOTP ascribes a valuation of Rs 284 for the standalone business and Rs 16 for subsidiaries, with a 25% Holding Co. discount, to arrive at a TP of Rs 300. While disbursement run-rate is likely to improve, weak asset quality trends weigh on profitability. Maintain HOLD.
