homemarket Newsstocks NewsM&M Finance is the top loser on the Midcap index after BoFA Securites downgrade
M&M Finance is the top loser on the Midcap index after BoFA Securites downgrade
The company’s expectations are high but net interest margins (NIMs) and operational expenditures are expected to disappoint in the near term.
Brokerage firm BoFA Securities has downgraded the recommendation on Mahindra & Mahindra Financial Services Ltd. to ‘Neutral’ with a target price of Rs 375 per share, implying a potential upside of 10 percent, due to its high valuations.
Analysts at BoFa Securities believe that the valuation of the Mahindra group’s financial services provider is at a premium to long-term average and is currently trading at an FY25E price-to-book value (P/BV) of 2.2x.
The company’s expectations are high but net interest margins (NIMs) and operational expenditures are expected to disappoint in the near term. However, the brokerage anticipates the company to remain on its transformational journey.
The company’s targeted diversification on both products and customers should allow it to significantly reduce AQ volatility, which has been a key area of concern for investors, stated analysts.
Mahindra & Mahindra Financial Services reported a 4.6 percent quarter-on-quarter growth in loan disbursements in the first quarter of FY24. However, the loan growth was 28 percent at Rs 12,150 crore compared to the year-ago quarter.
The company's net interest margins have contracted by 16 basis points.
The collection efficiency was at 94 percent for the first quarter of FY24, similar to the year-ago quarter. The company continued to maintain a comfortable liquidity chest of about 3 months requirement.
Shares of Mahindra & Mahindra Financial Services are trading 3.27 percent lower at Rs 329.65.
(Edited by : Rukmani Krishna)
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