M&M Financial shares down 23% from 52-week high; should you buy this stock?

M&M Financial Services Ltd (MMFS) delivered a subdued performance in the June quarter, impacted by elevated credit costs, which were 25 basis points higher than the estimated 1.9 per cent. Despite ongoing efforts to diversify beyond its core business, Emkay Global noted that MMFS’s portfolio remains heavily concentrated in the wheels segment, which accounted for 90 per cent of its book. It retained its 'Reduce' call on the stock.

“MMFS’s portfolio is heavily skewed toward the wheels segment, restricting near-term growth as new business lines are still too small to drive overall AUM expansion. MMFS targets 25 per cent of AUM from non-wheels segments (mortgage, SME, leasing) by FY30, though the mortgage/Housing business structure is undecided,” Emkay said.

For the June quarter, M&M Financial Services reported a 3.2 per cent year-on-year (YoY) growth in net profit at Rs 530 crore. It had reported a profit of Rs 513 crore in the corresponding quarter last year.

“Except in tractors, disbursement was sluggish across other wheels products, thus hurting overall disbursement. This poses a challenge for near-term growth, as the new segments are still too small to drive AUM growth,” Emkay added.

Emkay said that the asset quality remained stable, with GS3 assets at 3.85 per cent (up 16bps QoQ) and credit cost (on average asset) at 1.9 per cent (2.18 per cent on business assets). “However, we see growth and asset quality facing challenges in the near term, which would result in continued subpar profitability,” Emkay said.

On Wednesday, M&M Financial Services shares fell 2.48 per cent to settle at 259.00 on BSE. With the intraday low of Rs 257.30, the stock is down nearly 23 per cent from its 52-week high of Rs 333.64.

Emkay Global expects some recovery from the second quarter onwards, driven by improved margins from cross-selling, fee income and lower credit costs. It retained its ‘REDUCE’ rating on the stock with an unchanged June 2026 target price of Rs 260, implying a limited downside from current levels.