From The Economic Times · Veer Sharma · · 1m 50s
M&M Financial Services Shares Crash 10% After Q2 Results
M&M Financial Services shares drop 10% as Q2 results show rising credit costs and lower margins.
In brief
M&M Financial Services shares drop 10% as Q2 results show rising credit costs and lower margins. M&M Financial Services shares fell 10% after Q2 results revealed higher credit costs and declining net interest margins, with analysts lowering price targets. Originally reported by The Economic Times.
M&M Financial Services Shares Plunge
Shares of Mahindra & Mahindra Financial Services plunged as much as 10% to their day’s low of Rs 368 on the BSE on Thursday.
Q2 Earnings Report Highlights
The company reported a 55% year-on-year rise in consolidated net profit to Rs 882 crore for Q2 FY27, helped by higher business volumes and lower credit costs.
Revenue and Asset Growth
Revenue from operations rose 15% to Rs 5,164 crore, with net interest income increasing 17% to Rs 2,822 crore.
Consolidated Profit and Assets
On a consolidated basis, net profit rose 61% to Rs 911 crore and consolidated total assets grew 21% to Rs 1.80 lakh crore.
Credit Cost Moderation
Credit cost moderated to 1.6% of average total assets from 2.2% a year earlier, while net interest margin remained unchanged at 7%.
Management Targets
M&M Finance is targeting a return on assets of 2.2%-2.5% by FY31, compared with 2.2% in the September quarter.
Analyst Reactions
Nomura lowered its target price on M&M Financial Services to Rs 400 from Rs 415 while retaining its Buy rating, implying an upside of 35%.
Credit Quality Concerns
The brokerage has turned cautious on asset quality in the tractor financing segment and expects credit costs to rise to 1.8% on an annualised basis in Q3-Q4 FY27.
Funding Costs Impact
Nomura flagged rising funding costs as a concern and cut net profit estimates for FY27-FY29 by 1-9% while factoring in a 70-basis-point increase in funding costs.
The key point
M&M Financial Services shares fell 10% after Q2 results revealed higher credit costs and declining net interest margins, with analysts lowering price targets.
