Motilal Oswal: M&M Financial Q1 Controlled Opex Leads To PPoP Beat; Credit Costs Elevated
With the Ideal Finance JV, Mahindra Finance aims to replicate its business model in Sri Lanka. (Photographer: Dhiraj Singh/Bloomberg)

Motilal Oswal: M&M Financial Q1 Controlled Opex Leads To PPoP Beat; Credit Costs Elevated

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Motilal Oswal Report

Mahindra & Mahindra Financial Services Q1 FY21 reported profit after tax of Rs 1.6 billion (up 128% YoY; down 29% QoQ), a 3% miss. While pre-provision operating profit beat our estimates by 25%, higher-than-expected provisions at Rs 8.4 billion led to the modest PAT miss.

The board approved a 1:1 rights issue at Rs 50 per share, amounting to Rs 30.89 billion as of July 23, 2020 (record date). As per our calculations, while FY21 networth increases approximately 25%, book value per share declines ~35% to Rs 125.

Month-on-month improvement in disbursements and collections is encouraging; however, its sustenance is the key monitorable. Within its product mix, tractors, entry-level cars, and LCVs are likely to do well, while medium and heavy commercial vehicle and taxi aggregator are likely to witness slow recovery.

Click on the attachment to read the full report:

Motilal Oswal- Mahindra & Mahindra Financial Result Update.pdf

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