Mahindra Finance shares jump 8% to hit 52-week high post Q2 results; brokerages mixed on outlook
The shadow lender reported robust growth in both pre-provision operating profit (PPOP) and net profit, driven by margin expansion in its passenger vehicle and tractor financing segments.
- Oct 29, 2025,
- Updated Oct 29, 2025 9:41 AM IST
Shares of Mahindra & Mahindra Financial Services Ltd (Mahindra Finance) surged 8.10 per cent in Wednesday's trade to touch a one-year high of Rs 324.20, following the company's stronger-than-expected performance in the September quarter (Q2 FY26). The shadow lender reported robust growth in both pre-provision operating profit (PPOP) and net profit, driven by margin expansion in its passenger vehicle and tractor financing segments.
Brokerage Nirmal Bang said it remains positive on Mahindra Finance's outlook, especially in the passenger vehicle segment, which continues to benefit from favourable industry tailwinds. The brokerage also expects an improved monsoon to aid growth in the tractor segment. However, it cautioned that the commercial vehicle (CV) and construction equipment businesses remain weak due to persistent industry headwinds.
The brokerage highlighted stable asset quality trends, noting a marginal 9 basis points (bps) uptick in Gross Stage 3 (GS3) assets, while Stage 2 loans improved by 7 bps. It further pointed out a notable turnaround in the company's housing finance subsidiary, where GS3 fell below 3 per cent after a successful asset reconstruction company (ARC) transaction. Nirmal Bang raised its valuation multiple to 1.5 times and set a target price of Rs 331, implying a modest upside potential from current levels.
Meanwhile, Motilal Oswal Financial Services (MOFSL) termed the quarter "operationally mixed," as disbursements and loan growth remained muted due to deferred auto sales between mid-August and mid-September amid expectations of a GST rate cut. The brokerage observed minor seasonal deterioration in asset quality, with elevated credit costs and slippages, alongside continued high write-offs.
However, MOFSL highlighted a 12 bps quarter-on-quarter (QoQ) expansion in net interest margin (NIM), supported by lower costs of funds and reduced leverage following the completion of the rights issue. It maintained a 'Buy' rating on the stock with a target price of Rs 350.
Nuvama Institutional Equities said Mahindra Finance's Q2 results showed a beat on PPOP, supported by strong fee income growth of 16 per cent QoQ, though credit costs were higher than expected. The increase in credit costs was attributed to a quarterly loss given default (LGD) reset, which also led to a higher provisioning coverage ratio (PCR).
While noting the operational strength, Nuvama maintained a 'Hold' rating with a revised target price of Rs 288, up from Rs 280 earlier.
Shares of Mahindra & Mahindra Financial Services Ltd (Mahindra Finance) surged 8.10 per cent in Wednesday's trade to touch a one-year high of Rs 324.20, following the company's stronger-than-expected performance in the September quarter (Q2 FY26). The shadow lender reported robust growth in both pre-provision operating profit (PPOP) and net profit, driven by margin expansion in its passenger vehicle and tractor financing segments.
Brokerage Nirmal Bang said it remains positive on Mahindra Finance's outlook, especially in the passenger vehicle segment, which continues to benefit from favourable industry tailwinds. The brokerage also expects an improved monsoon to aid growth in the tractor segment. However, it cautioned that the commercial vehicle (CV) and construction equipment businesses remain weak due to persistent industry headwinds.
The brokerage highlighted stable asset quality trends, noting a marginal 9 basis points (bps) uptick in Gross Stage 3 (GS3) assets, while Stage 2 loans improved by 7 bps. It further pointed out a notable turnaround in the company's housing finance subsidiary, where GS3 fell below 3 per cent after a successful asset reconstruction company (ARC) transaction. Nirmal Bang raised its valuation multiple to 1.5 times and set a target price of Rs 331, implying a modest upside potential from current levels.
Meanwhile, Motilal Oswal Financial Services (MOFSL) termed the quarter "operationally mixed," as disbursements and loan growth remained muted due to deferred auto sales between mid-August and mid-September amid expectations of a GST rate cut. The brokerage observed minor seasonal deterioration in asset quality, with elevated credit costs and slippages, alongside continued high write-offs.
However, MOFSL highlighted a 12 bps quarter-on-quarter (QoQ) expansion in net interest margin (NIM), supported by lower costs of funds and reduced leverage following the completion of the rights issue. It maintained a 'Buy' rating on the stock with a target price of Rs 350.
Nuvama Institutional Equities said Mahindra Finance's Q2 results showed a beat on PPOP, supported by strong fee income growth of 16 per cent QoQ, though credit costs were higher than expected. The increase in credit costs was attributed to a quarterly loss given default (LGD) reset, which also led to a higher provisioning coverage ratio (PCR).
While noting the operational strength, Nuvama maintained a 'Hold' rating with a revised target price of Rs 288, up from Rs 280 earlier.