Shares of Mahindra and Mahindra Financial Services (Mahindra Finance) jumped nearly 10% in morning trade on the BSE on Wednesday, 22 July, a day after clocking a gain of 8.5%, boosted by the company’s strong June quarter (Q1FY27) results.
Mahindra Finance’s share price opened at ₹360 on Wednesday against its previous close of ₹350.65 and jumped 9.5% to an intraday high of ₹384. Thus, in just two consecutive sessions, the NBFC stock has soared 19%.
Mahindra & Mahindra Financial Services Q1 results
Driven by higher net interest margins and lower provisions, Mahindra and Mahindra Financial Services reported a 75% jump in its consolidated net profit to ₹927 crore for Q1FY27.
On a standalone basis, the NBFC’s profit jumped 70% year-on-year (YoY) to ₹899 crore.
Its assets under management (AUM) jumped 13% YoY, and disbursements grew 22% YoY, the highest-ever for the first quarter.
NIM (net interest margin) expanded by nearly 55 bps YoY to 7.3%, while credit cost improved by nearly 44 bps YoY to 1.5% in Q1FY27.
Is Mahindra Finance a stock to buy?
Many top brokerage firms are bullish on the stock in the long term, citing growth visibility and reasonable valuations.
Brokerage firm Emkay Global Financial Services has upgraded the stock to a “buy” from an “add”, and raised the target price by over 18% to ₹450. The current target price implies a 29% upside potential in the stock.
“We upgrade Mahindra Finance to a ‘buy’ while revising up Jun-27E target price by 18.4% to ₹450 from ₹380, implying SA FY28E PBV of 1.9 times and nearly 10% of value from subsidiaries,” said Emkay.
Emkay highlighted that Q1FY27 results reinforce its positive view, given Mahindra Finance’s impressive performance on asset quality, credit cost, and profitability.
“With disbursement growth picking up, the likelihood of growth in assets firing up has increased; this profitable growth visibility with reasonable valuations drives us to now upgrade the stock to a buy. With GS2+GS3 at a multiyear low (8.3%), PCR at 58.1%, and a healthy capital position, the balance sheet is well placed to absorb any stress from the external environment,” said Emkay.
“Profitability has been steadily improving, with NIM+Fee moving up and credit cost within a through-cycle band of 1.3-1.7%. With the multi-year transformation now clearly showing growth and ROA moving toward 2.5%, we believe the structurally improved profitability and fortified balance sheet present a compelling risk-reward ratio, supporting our upgrade,” Emkay added.
Brokerage firm JM Financial has maintained a buy call on the stock and raised the target price to ₹410 from ₹350 earlier.
JM Financial said that Mahindra Finance remains its top pick in the vehicle finance space, supported by its lower exposure to high-risk segments and a more attractive risk-reward profile relative to peers.
“The sharp acceleration in disbursement growth also reinforces confidence in a pickup in AUM growth ahead, with stable-to-improving asset quality providing an additional positive. We raise our FY27–28 EPS estimates by 7–9% and forecast an AUM CAGR of nearly 14% for FY27–28 with average RoA and RoE of nearly 2.4% and 14.5% in FY27E and FY28E, respectively,” said JM Financial.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
