Morgan Stanley ‘overweight’ on M&M Financial Services, expects 28% upside
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So far this year, the stock of M&M Financial Services has gained over 3 percent, as against 2 percent rise in the benchmark Sensex
Global brokerage firm Morgan Stanley has shared an “overweight” rating on the M&M Financial Services, with a target price of Rs 310 a share, an upside of 28 percent from current levels. The bullish call came after the company’s disbursements grew 13 percent on-year in February.
At 9.48 am, the stock was trading at Rs 291.65 on the NSE, up 1.44 percent from the previous day. So far this year, the stock has gained over 3 percent against a 2 percent rise in the benchmark Sensex.
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The company’s disbursements increased over 6.5 percent month-on-month (MoM) and 13 percent year-on-year (YoY), while gross assets rose 1.8 percent MoM and 24 percent YoY in February 2024, Morgan Stanley analysts said.
The management believes that healthy disbursement trends during the year till date have led to business assets crossing the milestone of Rs 1 lakh crore-mark, witnessing a growth of about 21 percent over March 2023 and 24 percent up over February 2023. The company continued to enjoy comfortable liquidity position on its balance sheet, with a liquidity chest of Rs 7,600 crore.
ALSO READ: M&M Finance Q3 results: Net profit down 12% at Rs 553 cr, NII stands at Rs 1,815 cr
“The disbursements growth implies 13 percent YoY gain and 34 percent MoM for March. If disbursements growth is missed, we believe that there could be risks to AUM forecast. The GS-2 and GS-3 remained rangebound versus December 2023,” analysts at Morgan Stanley said.
In Q3FY24, M&M Financial Services net interest income (NII) grew 8 percent quarter-on-quarter (QoQ) with net interest margin (NIM) uptick of 16 basis points (bps) QoQ. Meanwhile, provisions declined 3x QoQ in the third quarter of FY24.
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