MMFS: HFC subsidiary to merge with parent MMFS

Research evidence excerpt

M

Update

August 5, 2026 08:32 AM GMT

MMFS | Asia Pacific

Morgan Stanley India Company Private Limited+

Subramanian Iyer

Equity Analyst

HFC subsidiary to merge with

parent MMFS

Kushan Parikh, CFA

Equity Analyst

Sakshi V Chaplot

Research Associate

Key Takeaways

MMFS has announced that it is merging its HFC subsidiary, Mahindra Rural

Housing Finance (MRHFL), with itself. The appointed date for the scheme is 1 Apr,

2027

MMFS has a 98.43% stake in MRHFL, as of 30 Jun, 2026. The consideration is set

Mahindra and Mahindra Financial Services (MMFS.NS,

at 1.8 equity shares of the amalgamated company for every 10 shares of MRHFL

MMFS IS)

This planned merger does not change consolidated profit or loan book for MMFS,

India Financials | India

We ascribe Rs14/sh (3.8% of SOTP) to MRHFL in calculating our price target of

Stock Rating

Industry View

Price target

Up/downside to price target (%)

Shr price, close (Aug 4, 2026)

52-Week Range

Mkt cap, curr (bn)

Rs370 for MMFS (EW rating) – this implies 1.1x F28e BV and 1.4x F26 BV for

Fiscal Year Ending

03/26 03/27e 03/28e 03/29e

MRHFL

EPS (Rs)**

Prior EPS (Rs)**

BV/shr (Rs)*

ModelWare net inc (Rs

mn)

P/E

P/BV

Return on avg eqty (%)

20.65 27.31 32.79 39.29

178.1 198.1 222.3 251.6

28,710 37,961 45,579 54,614

as MRHFL was already being fully consolidated

However, if market participants were ascribing low to zero valuations to the HFC

business in their SOTP valuations, then to that extent it could help valuations

Link to exchange filing.

Materiality of MRHFL. As of 1QF27, MRHFL loan book was Rs89.8bn (6.3% of

consolidated loans). It contributed to ~1.4ppt of consolidated loan growth of 12.0%

YoY (standalone loan growth was 12.8%). In 1QF27, MRHFL disbursements of

Rs11.4bn (6.8% of consolidated disbursements) contributed ~3.9ppt of consolidated

disbursements growth of 20.4% YoY (standalone disbursements growth was 21.5%).

13.9

1.6

12.9

Equal-weight

Attractive

Rs370

(7)

Rs398.60

Rs412.20-251.00

US$5.8

14.6

2.0

14.5

12.2

1.8

15.6

10.1

1.6

16.6

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

framework

** = Based on consensus methodology

* = GAAP or approximated based on GAAP

e = Morgan Stanley Research estimates

…