M&M Financial Price Target Trimmed By JPMorgan After Q2 Business Update — Here's Why

JPMorgan has maintained its overweight rating on M&M Financial Services Ltd., but has trimmed its target price from Rs 335 to Rs 330, in the wake of the company's second-quarter business update.

The brokerage said M&M Financial's Q2FY26 pre-quarter update showcased relatively weak growth trends, with loan growth numbers falling below JPMorgan's estimates.

Loan growth for the quarter moderated to 12.8% year-on-year to Rs 1.27 lakh crore, trailing JPMorgan’s projection of 13.9%. Asset quality, though, held up better than expected.

Indeed, GS-2 and GS-3 combined rose only 5 basis points quarter-on-quarter versus JPMorgan’s forecast of 45 basis points, which is indicative of robust asset quality metrics.

JPMorgan adds that the moderation in M&M Financial's numbers could be attributed to potential sales deferrals, in the wake of 3% Goods and Service Tax (GST) cuts announced in September.

The brokerage firm expects M&M Financial to benefit from segments that could see a boost from GST rate cuts, including tractors and utility vehicles.

This is because a large portion of M&M Financial's lending is linked to rural and vehicle financing segment.

“We continue to believe that MMFS remains best positioned with significant exposure to segments which should see the benefit of GST cuts,” the note said.

The brokerage further highlights that an improving visibility on return on assets expansion could be key for a potential re-rating.

While M&M Financial trailed growth forecast, JPMorgan highlighted better asset quality and strong liquidity, which serve as a silver lining for the company heading into the earnings season.

Sixteen out of the 37 analysts tracking the company have a 'buy' rating on the stock, 15 recommend a 'hold' and six suggest a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 290, implying a upside of 5%.