Managing seasons smoothly: Healthy asset-quality trends in a seasonally weak quarter; key risk for FY27F is monsoon deficit; maintain Buy

Research evidence excerpt

Managing seasons smoothly: Healthy asset-quality trends in a seasonally weak quarter; key risk for FY27F is monsoon deficit; maintain Buy

Nomura | Mahindra & Mahindra Financial Services 21 July 2026

Company profile

MMFS was founded in early 1990's as a captive financier of Mahindra Utility Vehicles. It has subsequently diversified into tractors, non-Mahindra

products and a whole host of financial solutions tailored to under-served customers in under-penetrated rural markets like passenger vehicles,

commercial vehicles/ equipment, pre-owned vehicles and SME finance.

Valuation Methodology

We use a residual income methodology to arrive at our TP of INR415 which implies a 1.8x Jun28 PB. We have used a discounted residual income

method over other valuations methods such as Gordon Growth Model. We prefer residual income as it juxtaposes profits with the cost of capital

required to deliver those profits. The benchmark index is Nifty 50

Risks that may impede the achievement of the target price

1) With high exposure to rural markets, its growth outlook could be affected by macro factors and monsoon; 2) the company plans to diversify its

loan book away from vehicle financing alone. Any success or failure at new product segments could affect our growth assumptions; and 3) it has

seen entry of strong ‘second-in-line’ management who is currently driving the company’s transformation, thus key person risk is identified.

ESG

MMFS has taken various initiatives to conserve the environment and resources including paper saving, energy / emission reduction, saving water,

reduction in waste generation. It has also focused on the financing of electrical vehicles. MMFS recognises the risk posed by environmental