Mahindra & Mahindra Financial Services (MMFS IN) – Management Meet Update – Growth to pick up in H2 with stable NIM outlook – Upgrade to ‘Accumulate’
Published on 09 Dec 2025
We upgrade the stock to ‘Accumulate’ on sustainable growth and margin outlook over the medium term. The management of MMFS expects disbursement growth to pick up in H2FY26 with a strong uptick in tractor and PV volumes. Q2 AuM grew 13% YoY to Rs1,272.5bn; we build 15% for FY26E. Further, the management expects NIM to be resilient at ~7% over the medium term, supported by a favorable mix, boost in fee income, and lower CoF. Weak asset quality and elevated credit cost over the near term will weigh on profitability; however, we expect credit cost to normalize by FY27/ FY28E. Over the long term, the company expects RoA to improve to ~2.5%; we build 2.1% for FY28E. We value the standalone business of MMFS at 1.6x Sep’27E P/ABV (vs. 1.3x earlier). Our SOTP ascribes a valuation of Rs359 for the standalone business and Rs16 for subsidiaries, with a 25% holding company discount, to arrive at TP of Rs375. Upgrade to ‘Accumulate’.
