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Motilal Oswal Report
Mahindra and Mahindra Financial Services Ltd. has over the last 18 months embarked on multiple strategic initiatives, which we believe will lead to-
lower operating cost ratios through improved productivity aided by higher efficiencies,
sustainable improvement in asset quality resulting in lower credit costs,
much better risk management by leveraging analytics/business intelligence, and
improvement in business volumes by targeting the affluent rural and semi-urban customer segment with relevant lifecycle products.
Rural demand, which is already showing green-shoots of revival, should improve further, driven by higher rural spending (in the year leading up to the general elections), improvement in mining activity and the opening up of the contracting segment.
A better minimum support price and better agri yields for customers in the agri ecosystem should result in healthy rural cash-flows and would help to sustain demand even beyond the narrative of general elections.
Mahindra Finance has significantly beefed up the processes around repossessions and additional safeguards have been built. The regulator has seen through all the measures undertaken by the company and has revoked the ban on deploying third-party collection agencies. This will now aid improvement in repossessions activity and prevent any volatility in asset quality (which could have otherwise been there).
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