Mahindra Finance posts steady disbursements & collection efficiency in August, brokerages neutral

The non-banking finance company has recorded a 15 percent year-on-year growth in disbursements at Rs 4,400 crore for August. On a monthly basis, disbursements were flat.

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Shares of Mahindra & Mahindra Financial Services were trading nearly 1 percent higher at 10.10 am on September 5 riding on steady disbursements and collection efficiency for the month of August. The non-banking finance company recorded a 15 percent year-on-year growth in disbursements at Rs 4,400 crore in August. On a monthly basis, disbursements were flat.

The stock was quoting at Rs 298.85 on the BSE.

The year-to-date (till August FY24) disbursements stood at Rs 20,950 crore, up 22 percent over a year-ago period. Meanwhile, the collection efficiency for August remained flat at 96 percent YoY, while the stage-3 and stage-2 assets continued to be rangebound compared to June 2023.

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Following the August update, foreign broking firm Jefferies reiterated its Hold rating for the stock with a target price set at Rs 295. At a valuation of 2.1 times the FY24 core book value (BV), the upside potential appears limited, Jefferies said, considering the expected 13 to 14 percent return on equity (RoE) outlook over the period spanning FY23 to FY26.

Meanwhile, Morgan Stanley has assigned an Equal-weight rating to the stock with target price of Rs 300. The broking firm has assumed a higher growth trajectory in the second half of FY24. However, it cautioned that if disbursement growth fails to pick up, it could pose risks to the Asset Under Management (AUM) forecasts.

Under Mission 2025, the non-bank financial company is aiming for AUM growth of 2x by leveraging its leadership in vehicle financing and scaling up new growth engines such as SME lending, loan against property, leasing, and Digi Finco.

Additionally, the company expects its new businesses to contribute 15 percent to AUM mix. As of August end, the company’s AUM stood at ~Rs 90,500 crore.

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