ICICI Securities

M&M Financial Services (Buy)

CMP: 420.6

Target: ₹645

Mahindra & Mahindra Financial Services Limited is a Rural NBFC headquartered in Mumbai, India. It is amongst the top tractor financer in India and offers a wide range of financial products to address varied customer requirements.

We hosted the senior management of Mahindra & Mahindra Financial Services (MMFS) at the Mahindra Finance Day on November 21, 2018, at Mumbai. With MMFS’ core vehicle finance offering complemented with housing finance, insurance broking and asset management services of its subsidiaries; it offers a complete bouquet of products to its rural customers.

The panel discussion on “India’s rural economy” witnessed an engaging and insightful discussion between the panelists and the investor community. Based on these interactions, our belief has only got stronger that the green shoots of rural recovery are fructifying into a meaningful tailwind. On the back of this rural recovery, the GNPA cycle could continue to improve further and our thesis of very little incremental provisioning requirement over the next two years should stand in good stead. We maintain our high-conviction ‘buy’ rating on MMFS with a target price of ₹645.