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Why did M&M Financial slip 4% post Q4 results? Here's what brokerages say
At 12:40 PM on Wednesday, M&M Financial's stock was quoting at ₹268.90, down 2.98 per cent on the National Stock Exchange (NSE). In comparison, the benchmark Nifty50 index was trading at 24,218.35, up 51.10 points or 0.21 per cent. The stock has fallen nearly 23 per cent from its 52-week high of ₹343 touched on September 27, 2024. The non-banking financial services company's total market capitalisation stood at ₹33,223.40.66 crore.
M&M Financial Services Q4FY25 result update
The company's reported total income of ₹4,245 crore for Q4FY25, up 15 per cent compared to ₹3,706 crore in the year-ago period. Net interest income (NII) grew 9 per cent Y-o-Y to ₹2,156 crore from ₹1,971 crore in the corresponding quarter last fiscal. However, net interest margins (NIMs) decline from 7.1 per cent in Q4FY24 to 6.5 per cent in Q4FY25.
The company's profit after tax (PAT) came in at ₹619 crore in Q4FY25, down 9 per cent from ₹563 crore in the March 2024 quarter.
Brokerage views on M&M Financial Services
Motilal Oswal Financial Services (MOFSL)
M&M Financial Services delivered a soft quarter with tepid disbursements resulting in muted growth in assets under management (AUM). Net interest margins (NIMs) also decline on a sequential basis due to moderation in yields. On the asset quality front, there was no improvement despite Q4 being a seasonally strong quarter, while write-offs and loan losses remain elevated, MOFSL said in a note. ALSO READ |
"The outlook on loan growth and credit costs remains uncertain, with more clarity expected only at the end of Q1FY26. We believe this will be the true acid test for vehicle financiers," the brokerage added.
Elara Capital
M&M Financial Services' Q4 earnings disappointed on several counts including a sharp increase in the provision and elevated operational expenses (opex) that affected the bottomline. Margins suffered on the back of elevated funding costs and a rejig in loan management systems, said Elara Capital in a research note.
The subdued performance is expected to continue amidst weak demand for automobiles due to macroeconomic headwinds. Management expects tractors and non-wheels to drive growth, with contribution from non-wheels estimated to increase from the current 7 per cent to 25 per cent in future.
Emkay Global on M&M Financial Services
M&M Financial reported muted growth and profitability in the March 2025 quarter, with key figures largely in line with estimates. However, PAT was 5 per cent below the consensus estimates. Despite the continuous efforts by the management to diversify into other verticals, the company remained dominated by wheels at around 93 per cent. This is expected to restrict growth in the near-term as the newer segments are still too small to drive AUM growth. ALSO READ |
"Ahead, a sticky opex and marginal normalization in credit cost from the current superior levels are likely to limit scope for improvement in return on assets (RoA), driven by NIM and fee expansion on account of increasing fee yield and moderating cost of funds (CoFs)," the brokerage said in a note.
About M&M Financial Services
Mahindra & Mahindra Financial Services, a part of the Mahindra Group, is a non-banking financial services company (NBFC) primarily engaged in the business of financing the purchase of new and pre-owned auto and utility vehicles, construction equipment and SME Financing. It is the only Indian NBFC to be listed on the Dow Jones Sustainability Index for Emerging Markets. The company's subsidiaries include Mahindra Insurance Brokers and Mahindra Rural Housing Finance.
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