Mahindra And Mahindra Financial Services (MMFS.BO): 10 Volatility Well Contained; Stable RoAs Trigger Earnings Upgrade

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Mahindra And Mahindra Financial Services (MMFS.BO): 10 Volatility Well Contained; Stable RoAs Trigger Earnings Upgrade

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21 Jul 2026 14:16:53 ET │ 17 pages

Mahindra And Mahindra Financial

Services (MMFS.BO)

1Q Volatility Well Contained; Stable RoAs Trigger Earnings Upgrade

CITI'S TAKE

Controlled credit cost at 1.5% (in a seasonally weak quarter), fee/assets at Buy

1.5% and flat opex sustained RoAs at 2.4%. (PAT rising 70% YoY / 3% QoQ Price (21 Jul 26 15:30) Rs350.65

surpassing CitiE). GS3/GS2 inched up modestly to 3.45%/4.87% (vs Target price Rs440.00↑3.41%/4.76% QoQ) given focus on early bucket collections — uptick well

contained compared to >100bps average rise in 1Q. Loan spreads from Rs380.00

contracted 30-40bps as it has elevated the liquidity chest (by Rs55bn). Expected share price return 25.5%

Disbursements rose 22% YoY, broad-based across PV (+24%), Tractors

Expected dividend yield 1.4%(+45%), and SME (+30%), as the company pivots to growth in both core and

newer businesses (PL, Housing). Company has managed the 1Q volatility Expected total return 26.9%

well augmenting underwriting scorecards, portfolio monitoring and Market Cap Rs487,258M

intensified collection efforts. Factoring lower credit cost and opex, we raise

US$5,166Mearnings by 8%/5% for FY27E/FY28E (introduce FY29E). Revise TP to Rs440

assigning 2.0x Sep’27 book (earlier Rs380 at 1.8x) given improved RoE

profile. Maintain Buy.

Price PerformanceSeasonal Uptick, Well-Contained; Coverage Stays Elevated — GS3/GS2 ticked up

modestly by 4bps/11bps QoQ to 3.45%/4.87% (combined GS2+GS3 at 8.3%), well (RIC: MMFS.BO, BB: MMFS IN)

contained compared to 100bps average rise in every 1Q. GS3 coverage remained

stable at 58.1% (vs 58.6% in 4QFY26), with the cumulative overlay buffer of