Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

BUY on Mahindra & Mahindra Financial Services - Remains an inexpensive rural play - HDFC Securities

Posted On: 2020-10-28 09:20:05


Mr. Darpin Shah, Institutional Research Analyst, HDFC Securities

MMFS' 2Q earnings were slightly ahead of estimates. Despite the uptick in collection efficiency (~82% in September), we continue to build a sharp rise in GNPAs to 10.1% in FY21E. We have revised our AUM growth estimates upwards, to adjust for current AUM growth trends and management commentary; we model a slight improvement in operating efficiency. These drive our earnings estimates. MMFS' recent capital raise and ability to borrow with relative ease are pertinent positives that set it apart from most NBFCs. We maintain BUY with a target price of Rs 175.

2QFY21 highlights: Operating profits at Rs 10.3bn (+25.9/-1.3% YoY/QoQ) were slightly ahead of our estimates while net earnings at ~Rs 3bn (+20.6/94.8%) were ~7% ahead of estimates.

Portfolio growth: AUM growth expectedly slowed, reaching 12.3/0.3% YoY/QoQ. Disbursals rebounded sequentially (+54.7%) but were 44.6% lower YoY. The management expects disbursals in 2HFY21 to remain flattish YoY, due to the relatively low impact of COVID-19 in upcountry locations and a good monsoon season. Consequently, it guided for loan growth of 8- 10% in FY21E. We have revised our growth estimates upwards to 5% in FY21E and 12% over FY22-23E.

Funding and liquidity: MMFS' CRAR, at 25.1% (including Tier 1 at 20.8%), was bolstered by its recent rights issue. Consequently, as business growth remained muted, borrowings dipped 4.6% QoQ (+6.6% YoY). The management indicated that MMFS held liquid assets (including some portion of investments) of ~Rs 85bn, and the excess liquidity exerted a 50- 60bps NIM drag. MMFS intends to reduce liquidity buffers to ~Rs 40-50bn.

Asset quality and provisioning: GS III dipped 87/216bps to ~7% on account (1) high write-offs (~Rs 9.3bn), (2) the recent SC order. GS II too was ~7.9%. Collection efficiency improved to ~82% in September (73% in October so far). ~17.2% of MMFS' customers had not paid a single instalment. While the management does not expect GNPAs to rise further, we build in GNPAs of 10% by FY21E and credit costs of ~3% over FY21-23E.

Shares of MAHINDRA & MAHINDRA FINANCIAL SERVICES LTD. was last trading in BSE at Rs.121.35 as compared to the previous close of Rs. 125.65. The total number of shares traded during the day was 1028860 in over 13792 trades.

The stock hit an intraday high of Rs. 126.4 and intraday low of 120.25. The net turnover during the day was Rs. 126825981.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com



Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Metropolis Healthcare - Nov 25, 2020 - Angel Broking

NTPC - Showcase of strength & competitiveness - ICICI Securities

Telecom - Market Share TRACKER - Bharti is narrowing the gap on incremental market share vs RJio - ICICI Securities

Cochin Shipyard - Q2FY21 Result Update - ICICI Direct

Engineers India - Q2FY21 Result Update - ICICI Direct

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct

Initiating Coverage on Sudarshan Chemical - Leaping into the league of giants - HDFC Securities

Earnings Wrap Q2FY21: Earnings outperform, post Covid recovery picks up steam - ICICI Direct

Vodafone Idea Positive development beneficial for IDFC first bank - Angel Broking

Lakshmi Vilas Bank - Angel Broking

WIPRO Buyback record date announcement - Angel Broking

TCS buyback record date announcement - Angel Broking

Banks Sector Update - Collection efficiency - a positive surprise! - HDFC Securities

Quant Pick - Max Financial Services - ICICI Direct

Graphite India - Q2FY21 Result Update - ICICI Direct

Gladiator Stocks - Maruti Suzuki India - ICICI Direct

Exide Industries - Q2FY21 Result Update - ICICI Direct

Mishra Dhatu Nigam - Execution outlook remains strong - ICICI Securities



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019