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

| More

Mahindra & Mahindra Financial Services - Portfolio stress peaking out - HDFC Securities

Posted On: 2021-07-28 17:20:51 (Time Zone: UTC)


Mr. Krishnan ASV, Institutional Research Analyst, HDFC Securities and Mr. Deepak Shinde, Institutional Research Analyst, HDFC Securities

MMFS disappointed our expectations with a loss of INR 15.3bn, on account of higher provisions (up 2.3x YoY) at INR 28.2bn, which was the outcome of an inflated stress pool of 35% (GS-II at 19.4% and GS-III at 15.5%). Asset quality deteriorated as collections and disbursements were significantly impacted by the second wave, as witnessed across other lenders. We revise our FY22/23E forecasts downwards by 14.4/3.3%, factoring in higher credit costs and interest reversals. However, gradual normalisation of portfolio stress, sponsor-backed funding cost advantage, and inexpensive valuation underpin our ADD rating with a revised TP of INR 177 (earlier INR 183), implying 1.2x Mar'23 ABVPS.

Portfolio stress peeking out: MMFS reported GNPAs of 15.5% and a GS-II portfolio (including restructured loans of 2.8%) at 19.4%, taking the total stress book to 35%, reflecting the difficulties in physical collection and the need for rural customers to hoard liquidity. The management commentary suggests that the stress is transient as (a) 75% of GS-II loans have exhibited significant repayment activity and (b) a meaningful proportion of NPAs have paid up 50% of their outstanding loans. As the macro environment situation normalises, MMFS is likely to migrate to 35-40% PCR (in line with its historical LGDs) and, accordingly, witness significant provision reversals over the next three quarters. We build in GNPAs of 12% and 9% for FY22E and FY23E respectively - we also build in credit costs of 3.2/2.7% in FY22/FY23E.

AUM growth to rebound in H2FY22: Disbursals de-grew 35% sequentially (up 42% YoY due to a low base). Tractor disbursements have continued to lose traction (clocking below-industry growth rate) over the past couple of quarters on account of a high share of commercial tractors. We continue to build in an AUM CAGR of 10.7% over FY22-23E, likely to be back-ended towards H2FY22, led by tractors (17% of AUM), pre-owned vehicles (12%) and Auto - M&M (29%).

Shares of MAHINDRA & MAHINDRA FINANCIAL SERVICES LTD. was last trading in BSE at Rs. 142.45 as compared to the previous close of Rs. 148.05. The total number of shares traded during the day was 2166208 in over 8146 trades.

The stock hit an intraday high of Rs. 149.4 and intraday low of 141.5. The net turnover during the day was Rs. 308577695.


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:

Automobile Sector - Monthly Quick View - Aug'21 - Mixed Performance across Segments - Reliance Securities

Axis Securities initiating coverage on ICICI Securities

Company Update - Minda Corporation - Q1FY22 - ICICI Direct

Quant Pick - PVR Ltd - ICICI Direct

Quant Pick - ONGC - ICICI Direct

Peak in the headline wholesale inflation is behind us - WPI August 2021 - Acuité Ratings

Sansera Engineering - IPO - Strong Outlook with Steady Cash Flow - Reliance Securities

APL Apollo Tubes - Journey from a semi-commodity player to a branded one - HDFC Securities

Nazara Technologies Ltd - Upbeat in medium-term, Uncertain over Long-term - YES Securities

IPO Review - Sansera Engineering Ltd - ICICI Direct

Overall index is still 0.3% lower than the pre-pandemic levels - IIP July 2021

YES SECURITIES on Monthly General Insurance & Mutual Funds Data

India urban logistics spaces expected to cross 7 million sq. ft by 2022: JLL

Neogen Chemicals - Breaking into the next orbit with a bang - HDFC Securities

Gladiator Stocks - Bharti Airtel Ltd - ICICI Direct

Gladiator Stocks - V-Guard - ICICI Direct

Balkrishna Industries - Industry export growth accelerates - ICICI Securities

HDFC Life Insurance - Exide Life Acquisition - Maintain ADD - YES Securities

Gladiator Stocks - Grindwell Norton - ICICI Direct

Gladiator Stocks - Godrej Properties - ICICI Direct

Monthly Auto Volumes - August 2021 - ICICI Direct

Stock Tales - Easy Trip Planners - ICICI Direct

IPO Review - Vijaya Diagnostic Centre Ltd - ICICI Direct

AU Small Finance Bank - Attrition at top level remains key challenge; business momentum sustained in Jul/Aug'21 - ICICI Securities

Gladiator Stocks - State Bank of India - ICICI Direct

Gladiator Stocks - PNC Infratech - ICICI Direct

Vijaya Diagnostic Centre Ltd - IPO Note - YES Securities

Consumer Durables Sector - Lockdown mars performance yet again - Institutional Research Desk at HDFC Securities

75% of the employees today want to be in office at least once a week as compared to 52% in October 2020: JLL

Gladiator Stocks - Safari Industries - ICICI Direct

Gladiator Stocks - Interglobe Aviation - ICICI Direct

IPO Review - Ami Organics Ltd - ICICI Direct

Q1FY22 GDP - 31st Aug 2021 - Acuité Ratings & Research

Avanti Feeds - Higher input prices hurt margins - ICICI Securities

Company Update - Restructuring - Aarti Industries - ICICI Direct

Q1FY22 Company Update - MM Forgings - ICICI Direct

Company Update - Arvind Fashions - ICICI Direct

Zomato - Can margins and multiples surprise? - ICICI Securities

Ujjivan Small Finance Bank - Top management change and lumpy provisioning concern to weigh on valuation in near term - ICICI Securities

Bharat Dynamics - Guided missile systems to drive orderbook and profit growth - ICICI Securities

Economy - Continued accommodation necessary despite inflationary risks: MPC minutes - ICICI Securities

InterGlobe Aviation - Annual report analysis: Liquidity management remains the mainstay in anticipation of traffic recovery - ICICI Securities

General insurance - Health remains dominant growth driver; Strong all-round performance by Bajaj Allianz - ICICI Securities

Earnings Wrap Q1FY22: Resilient earnings, limited impact of second Covid wave - ICICI Direct

Fine Organic Industries Results Review - In-line performance - HDFC Securities

Power Plus Sector Update - July witnessed strong ~10% generation growth - HDFC Securities

Information Technology Sector Update - 'Hit Refresh' - HDFC Securities

Maintain ADD on JK Cement - Healthy performance - HDFC Securities

Maintain BUY on Star Cement - Margin recovers on pricing gain - HDFC Securities

Maintain BUY on Sadbhav Engineering - Long road to recovery - HDFC Securities


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

disclaimer copyright © 2005 - 2020