M&M Financial Services Q1 Review: Provisions Spark Brokerages' Concern — What This Means for Investors
Elevated provisions played a key role in dampening M&M Financial's profitability, with provisions for the June quarter rising 44.3% to Rs 660 crore, compared to Rs 457 crore in the previous quarter
Higher credit cost and provision impacted Mahindra & Mahindra Financial Services Ltd.'s profitability, brokerages noted after the non-banking financial company reports its results for the first quarter of the financial year ending March 2026 on Tuesday.
The Mumbai-based NBFC, part of the larger Mahindra & Mahindra Financial Services Ltd, reported a rise of 3.2% in standalone net profit to Rs 530 crore, which missed estimates from brokerage firms Jefferies and Macquarie.
Elevated provisions played a key role in dampening M&M Financial's profitability, with provisions for the June quarter rising 44.3% to Rs 660 crore, compared to Rs 457 crore in the previous quarter.
M&M Financial Services Q1 FY26 Highlights (Standalone, YoY)
Net profit rises 3.2% to Rs 530 crore versus Rs 513 crore
Total Income rises 18% to Rs 4,438 crore versus Rs 3,760 crore
Here's what brokerages had to say after M&M Financial announced their Q1 results.
Jefferies On M&M Financial
Jefferies maintained a 'hold' call on M&M Financial in the wake of its June quarter earnings while notably cutting the target price to Rs 296 from Rs 306.
The brokerage firm highlighted higher provisioning numbers for the April-June quarter, which led to the miss on profit numbers.
Subdued disbursement growth was also a key concern for M&M Financial during the April-June period.
However, Jefferies highlighted that margins did improve, and the company could stand to benefit from a potential rate cut in the second half of this calendar year.
Valuations also seem reasonable, as per Jefferies, though the brokerage firm believes visibility around return on asset improvement was a key driver behind the re-rating.
Macquarie On M&M Financial
Macquarie maintained an 'Underperform' rating on M&M Financial while keeping its target price of Rs 235 unchanged.
Macquarie highlighted the 'soft quarter' for M&M Financial, pointing out that higher credit costs led to the PAT miss.
Although the PAT miss was partly offset by margin improvement, the impact of higher credit costs appears to be overbearing at this point.
Credit cost for the NBFC in the June quarter stood at 1.9%. The management has guided for a credit cost of 1.7% in FY26.
Net interest margins, seeing an uptick of 20 bps on a quarter-on-quarter basis, had a one-off impact of dividend, Macquarie noted, while sustainable return on assets remains lower than peers.
