Mahindra & Mahindra Financial Services’ share price hit a 52-week high at Rs 243.60, on surging 6.4 per cent in Monday’s intra-day trade in an otherwise weak market after the company announced it recorded a disbursement of approximately Rs 4,500 crore in November 2022, delivering a 75 per cent year on year (YoY) growth, on the backdrop of positive macro environment.
“The business continued its momentum with the disbursement of approximately Rs 4,500 crore delivering a 75 percent YoY growth on the backdrop of a positive macro environment, the company said in an exchange filing.
The year-to-date disbursement at approximately Rs 31,050 crore registered a year-on-year growth of 99 percent. Healthy disbursement trends led to a strong gross asset book of approximately Rs 76,300 crore, growing around 3.4 percent over September 2022, the filing said.
The collection efficiency (CE) was at 96 percent for November 2022 against 94 percent in the year-ago period. Stage 2 assets as at November end were down sequentially and are estimated below 9 percent, while Stage 3 assets remained stable at lower than 7 percent at month end, it added.
The stock of Mahindra Group non-banking finance company (NBFC) surpassed its previous high of Rs 235, touched on September 15, 2022. At 10:53 am, the stock traded 6 per cent higher at Rs 242, as compared to 0.42 per cent decline in the S&P BSE Sensex. The average trading volumes at the counter jumped over three-fold with a combined 9.3 million shares changing hands on the NSE and BSE.
Prabhudas Liladher in September quarter results update said that Mahindra Finance’s asset growth has come back and we are witnessing asset growth beginning to happen and it’s not happening through just any single product or it’s not happening through any single geography and therefore it’s an outcome of the country across the product growth that we have seen. Barring taxi segment especially aggregators, company sees robust demand with increasing customer cashflows and positive macro indicators.
Management has said that impact of RBI ban of repossession will be limited only to 2,000/3,000 vehicle per month. It has held healthy discussions with the regulator and is positive that the ban will lifted soon. The company has launched a settlement scheme which whereby customers’ whose vehicles were to repossessed will be allowed for a settlement of account. The company has also migrated about 6,000 employees on its roll under contract, the brokerage firm had said in conference call highlights.
What Should Investors Do Now?
Global research firm CLSA has a “buy” call on the stock, with a target of Rs 260 a share, an upside of 8 percent from the current market price.
The brokerage firm said the disbursement traction remained healthy and collections were strong, CNBC-TV18 said.
Morgan Stanley has an “overweight” call with the target at Rs 275 a share, an upside of 15 percent from the current level. “Disbursements and collections remained strong in November. November business update was strong aided by macro tailwinds, as per management. Collection efficiency in November rose MoM and YoY,” it said.
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