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Nirmal Bang Report
We met with the management of Mahindra and Mahindra Financial Services Ltd. Key takeaways from the meeting are:
Disbursement trend continues to remain robust, led by pre-owned vehicle loans; expects to double assets under management by FY25-end.
Expects FY24 net interest margin to remain stable at ~7% with improvement seen in FY25, driven by a rising share of pre-owned vehicle finance loans in loan mix.
Opex to remain elevated in FY24 (opex-to-assets at ~3%) on account of investment in the franchise. Improvement in collection efficiency and lower write-offs could support reduction in credit cost.
We have changed our estimates mainly to account for a higher net interest margin trajectory in FY25.
We maintain 'Accumulate' on Mahindra Finance and value the standalone business at Rs 323 (1.9 times September-25 adjusted book value) and subsidiaries at Rs 17/share post 25% holding company discount to arrive at our target price of Rs 340.
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