Mahindra & Mahindra Financial: CV weakness a concern; buy, hold or sell MMFSL stock?
MOFSL said MMFSL reported an operationally mixed quarter, marked by muted disbursements and loan growth, largely impacted by deferred auto sales.
- Oct 29, 2025,
- Updated Oct 29, 2025 7:50 AM IST
Mahindra & Mahindra Financial Services (MMFSL) reported stronger-than-expected pre-provision operating profit (PPOP) and net profit for the September quarter, supported by margin expansion led by passenger vehicles and tractors. However, analysts noted that disbursements remained subdued, loan growth was weak, and the commercial vehicle segment continued to be a key area of concern.
Nirmal Bang said it remains positive on the passenger vehicle segment, supported by favourable industry tailwinds, while an improved monsoon is expected to aid tractor sales. However, the brokerage noted that the commercial vehicle and construction equipment businesses continue to be major drags, with industry headwinds persisting.
"We closely track the company’s asset quality metrics; while the GS3 witnessed a marginal 9 bps uptick, stage 2 loans improved by 7 bps. The housing finance subsidiary also saw a major turnaround with GS3 falling below 3 per cent after a successful ARC transaction. We increase our target multiple to 1.5 times, with a target of 331. giving an 8.2 per cent discount to its long-term average multiple of 1.6 times," Nirmal Bang said.
MOFSL said MMFSL reported an operationally mixed quarter, marked by muted disbursements and loan growth, largely impacted by deferred auto sales between mid-August and mid-September amid expectations of a GST rate cut.
"Asset quality exhibited minor seasonal deterioration, marked by elevated credit costs, higher slippages, and continued higher levels of write-offs. On a positive note, NIM expanded 12 bps QoQ, driven by benefits on CoF and reduced leverage from the completion of the rights issue," it said. This brokerage has 'Buy' rating and a target of Rs 350 for MMFSL.
Nuvama Institutional Equities said MMFSL reported a beat on PPOP driven by a beat on fees, but a miss on credit cost. "The credit cost miss (despite improving asset quality) was from a sharp jump in credit cost for GS3 due to the quarterly LGD reset, which also led to a higher PCR. Fee growth was strong at 16 per cent QoQ. PPOP expanded at a strong 11 per cent QoQ, beating consensus by 5 per cent," it said.
This brokerage maintained its ‘Hold’ rating on MMFSL with a revised target of Rs 288 against Rs 280earlier. The management is optimistic about a demand recovery post-GST in H2FY26 with green shoots already seen in October. MMFSL said it is confident of better recoveries and lower provisions in H2FY26. The full year credit cost guidance remains unchanged at 1.7 per cent, lower than credit cost of 2.2 per cent in Q2FY26.
Mahindra & Mahindra Financial Services (MMFSL) reported stronger-than-expected pre-provision operating profit (PPOP) and net profit for the September quarter, supported by margin expansion led by passenger vehicles and tractors. However, analysts noted that disbursements remained subdued, loan growth was weak, and the commercial vehicle segment continued to be a key area of concern.
Nirmal Bang said it remains positive on the passenger vehicle segment, supported by favourable industry tailwinds, while an improved monsoon is expected to aid tractor sales. However, the brokerage noted that the commercial vehicle and construction equipment businesses continue to be major drags, with industry headwinds persisting.
"We closely track the company’s asset quality metrics; while the GS3 witnessed a marginal 9 bps uptick, stage 2 loans improved by 7 bps. The housing finance subsidiary also saw a major turnaround with GS3 falling below 3 per cent after a successful ARC transaction. We increase our target multiple to 1.5 times, with a target of 331. giving an 8.2 per cent discount to its long-term average multiple of 1.6 times," Nirmal Bang said.
MOFSL said MMFSL reported an operationally mixed quarter, marked by muted disbursements and loan growth, largely impacted by deferred auto sales between mid-August and mid-September amid expectations of a GST rate cut.
"Asset quality exhibited minor seasonal deterioration, marked by elevated credit costs, higher slippages, and continued higher levels of write-offs. On a positive note, NIM expanded 12 bps QoQ, driven by benefits on CoF and reduced leverage from the completion of the rights issue," it said. This brokerage has 'Buy' rating and a target of Rs 350 for MMFSL.
Nuvama Institutional Equities said MMFSL reported a beat on PPOP driven by a beat on fees, but a miss on credit cost. "The credit cost miss (despite improving asset quality) was from a sharp jump in credit cost for GS3 due to the quarterly LGD reset, which also led to a higher PCR. Fee growth was strong at 16 per cent QoQ. PPOP expanded at a strong 11 per cent QoQ, beating consensus by 5 per cent," it said.
This brokerage maintained its ‘Hold’ rating on MMFSL with a revised target of Rs 288 against Rs 280earlier. The management is optimistic about a demand recovery post-GST in H2FY26 with green shoots already seen in October. MMFSL said it is confident of better recoveries and lower provisions in H2FY26. The full year credit cost guidance remains unchanged at 1.7 per cent, lower than credit cost of 2.2 per cent in Q2FY26.