Mahindra & Mahindra Financial Services (M&M Financial) shares jumped more than 7% on Tuesday, hitting a new 52-week high. This happened after the NBFC reported a good set of quarterly results. Analysts think that the stock will be worth between Rs 283 and Rs 320 in the next 12 months. Their price targets show that the price could go up by 15% from Tuesday’s high of Rs 277.95.
Motilal Oswal Securities said that M&M Financial’s numbers for the March quarter were good, and that this brokerage is becoming more confident that the company will turn around. This brokerage thinks the stock is worth Rs 320. Motilal Oswal Securities said that because M&M Financial has a long history, strong parents, and a great liability franchise, it has handled the stress from the pandemic fairly well and is in a good situation to reach its goals. It also said that the synergies between the parent company and M&M Financial had been a very important part of this possible comeback.
We have personally closely observed the company’s change over the last six quarters with some cynicism, given the volatility in performance the company has shown in the past. Even though Anish Shah, Chairman of MMFS, said that M&M Financial’s transformation is only halfway done, Motilal Oswal said, “We are ready to believe in M&M Financial’s transformation path.”
JM Financial said that M&M Financial’s profit was higher than what it expected because the provision was lower, but the pre-provision running profit was lower than what it expected because opex and staff costs were higher. The NBFC’s management showed a strong commitment to achieving its Mission 2025, which is to double the AUM (compared to FY22 levels) and get a return on assets (RoA) of 2.5%.
This is probably going to be driven by increasing the share of premium clients (which also mimics the parent’s newer product profile) and newer products with lower credit charges. The management’s renewed focus on crucial profitability and asset quality measures has benefited the price of M&M Financial stock, and additional returns will be driven by earnings predictability and sustained achievement of its stated goals, it said.
The stock’s goal for this exchange is Rs 310.
Elara Securities said that M&M Financial’s chances of being re-rated depend on its earnings growth and performance being stable and predictable. It said that the outlook for the monsoon and losing market share because of competition are key risks. The goal price for this stock has gone up from Rs 230 to Rs 283.
Nuvama Institutional Equities said that it is confident that the volatility in quarterly profits and the quality of assets are a thing of the past. This is because it has improved its risk management, collections infrastructure, technology, and product line. The stock is worth Rs 310 to this company.