Hold Mahindra and Mahindra Financial Services - Emkay

Reco: HOLD
CMP: Rs 837
Target Price: Rs 890

Stake sale in MIBL at lucrative valuations

- MMFS approved 12.4% stake sale in its insurance broking arm "MIBL" to Inclusion Resources (IRPL) for Rs643mn, valuing the entity at Rs5.2bn or Rs43/Share for MMFS

- IRPL will further increase its stake to 15% by infusing 2.7% equity or Rs140mn in MIBL. The equity infusion will provide MIBL with capital to grow

- 50-100bps decline in bank's base rate and commercial paper rate in FY13YTD to aid margin improvement. Expect NIMs to increase to 9.1%/9.4% for FY13/14 from 8.7% in FY12

- We are revising our NII estimates upwards by 5% each for FY13/14E and earnings by 13%/7% for FY13/14. We revise our target price to Rs890. Rating changed to HOLD.

Source : Equity Bulls

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