BSE: 532720 | NSE: M&MFIN | Finance - NBFC | Mid Cap
Past 10 year’s financial track record analysis by Moneyworks4me indicates that Mahindra & Mahindra Financial Services Ltd is a below average quality company.
The key valuation ratios of Mahindra & Mahindra Financial Services Ltd's currently when compared to its past seem to suggest it is in the Somewhat Undervalued zone.
The Price Trend analysis by MoneyWorks4Me indicates it is Semi Strong which suggest that the price of Mahindra & Mahindra Financial Services Ltd is likely to Rise-somewhat in the short term. However, please check the rating on Quality and Valuation before investing.
Data adjusted to bonus, split, extra-ordinary income, rights issue and change in financial year end.
| Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 | TTM | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income (₹ Cr.) | 6,021 | 6,554 | 7,146 | 7,884 | 10,372 | 11,885 | 12,111 | 11,318 | 12,700 | 15,797 | 15,876 | |
| YoY Gr. Rt. % | - | 8.9% | 9% | 10.3% | 31.6% | 14.6% | 1.9% | -6.6% | 12.2% | 24.4% | - | |
| Adj EPS (₹ ) | 9.9 | 8.3 | 5.5 | 11.8 | 18.1 | 10.7 | 6.3 | 9.2 | 16.8 | 15.7 | 17.6 | |
| YoY Gr. Rt. % | - | -15.5% | -33.8% | 113% | 54.1% | -41.2% | -41% | 46.8% | 82.2% | -6.8% | - | |
| BVPS (₹ ) | 64.1 | 69.6 | 74.9 | 97.6 | 111.4 | 118.1 | 127.7 | 136.7 | 150.1 | 161.2 | 162.5 | |
| YoY Gr. Rt. % | - | 8.7% | 7.5% | 30.4% | 14.2% | 6% | 8.1% | 7.1% | 9.8% | 7.4% | - | |
| To view Net Profit/Total Funds (%) Colour Rating Guide click here ⓘ | ||||||||||||
| Net Profit/Total Funds (%) | 2.6 | 1.9 | 1.1 | 2.2 | 2.8 | 1.4 | 0.9 | 1.4 | 2.2 | 1.7 | 0 | |
CAGR Colour Code Guide ⓘ
| 9 Years | 5 Years | 3 Years | 1 Years | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Interest Income | 11.3% | 8.8% | 9.3% | 24.4% | ||||||||
| Adj EPS | 5.3% | -2.9% | 35.6% | -6.8% | ||||||||
| BVPS | 10.8% | 7.7% | 8.1% | 7.4% | ||||||||
| Share Price | 5.7% | 3.6% | 20% | -0.9% | ||||||||
| RATIOS \ YEARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 | TTM | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Asset Quality Ratio | To view Asset Quality Ratio Colour Rating Guide click here ⓘ | |||||||||||
| Net NPA to Net Advances (%) | 2.6 | 3.5 | 4 | 4.1 | 5.3 | 6 | 4 | 0 | 0 | 0 | - | |
| Capitalization Ratio | To view Capitalization Ratio Colour Rating Guide click here ⓘ | |||||||||||
| Capital Adequacy Ratio (%) | 18.3 | 17.3 | 17.2 | 21.9 | 20.3 | 19.6 | 26 | 0 | 0 | 0 | - | |
| Margins | ||||||||||||
| Net Profit Margin (%) | 15.4 | 12 | 7.4 | 15.4 | 18 | 9.1 | 6.4 | 10.2 | 16.3 | 12.3 | 13.7 | |
| Performance Ratios | To view Performance Ratios Colour Rating Guide click here ⓘ | |||||||||||
| Return on Equity (%) | 16.5 | 12.7 | 7.9 | 14.5 | 17.7 | 9.4 | 5.7 | 7.1 | 11.7 | 10.1 | 10.9 | |
Return on Equity has increased versus last 3 years average to 10.90%
Total Income has increased 9.26 CAGR in last 3 years
Net Profit has increased 35.61 CAGR in last 3 years
Total income growth is good in last 4 quarters
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| Standalone | Consolidated | |
|---|---|---|
| TTM EPS (₹) | 16.6 | 17.6 |
| TTM Sales (₹ Cr.) | 14,591 | 15,876 |
| BVPS (₹.) ⓘ | 148 | 162.5 |
| Reserves (₹ Cr.) ⓘ | 18,036 | 19,824 |
| P/BV ⓘ | 1.81 | 1.65 |
| PE ⓘ | 16.11 | 15.18 |
| From the Market | |
|---|---|
| 52 Week Low / High (₹) | 246.30 / 342.90 |
| All Time Low / High (₹) | 19.43 / 346.40 |
| Market Cap (₹ Cr.) | 33,100 |
| Equity (₹ Cr.) | 247.1 |
| Face Value (₹) | 2 |
| Industry PE ⓘ | 27.4 |
| Pledged * | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Results: M&M Financial Services reported 7% growth in net interest income* and 8% growth in total income year on year. Overall loan book increased by 2% year on year and no new loans were disbursed during the quarter.
Click here to check the 10 Year X-ray of M&M Financial Services
Key Highlights:-
Outlook: M&M Financial Services expects rural segment to turnaround faster than urban. On liquidity side the company is comfortable to pay off interest and meet fixed costs until March 2021. Volume of collections in May doubled from April and even better in June.
Supply side of pre-owned vehicles is subdued and until that picks up, converting demand would be challenging. Company has made aggressive provisioning looking at certain areas, locations and type of products.
South India and Maharashtra have been performing doing well while other states are doing average. Most of the slippages were from tractor customers and are expected to reverse as the money has come in. Company is expecting to take net NPA below 4% over the period by aggressively provisioning over next 9-12 months.
We have liked the company due to its niche offering in rural areas where banks don’t lend, strong execution, reasonable size. Current traction in rural economy shows the signs of growth. We already own M&M and through it we own M&M Financial Services. We also own other financials hence we didn’t recommend M&M Financial Services. If you own less than 20% in financials, you can consider Mahindra & Mahindra Financial Services. Please ensure you buy large private banks first as they provide better risk -reward and large opportunity in long term.
Rights Issue: M&M Financial Services is raising equity via rights issue at a price of Rs. 50/ share versus CMP of Rs. 230. Since it’s a rights issue, the lower price of offering doesn’t affect valuation of the company. Only if an investor does not apply for rights issue, his individual holding will get diluted. We believe to get full subscription, the company has come up with lower price per share.
We believe to retain their share of equity in the company existing shareholders must apply for rights issue. Like in any rights issue, only existing shareholders can apply.
* Net Interest Income- Total interest earned by the bank on lent amount minus Total interest that it expended on its deposits.
**Net NPA- Gross NPA minus provisions
Results: M&M Financial Services reported 10% growth in net interest income* and 13% growth in total income year on year. Overall loan book increased by 12% year on year however, the disbursements declined by 4%.
Key Highlights:-
Outlook: During last quarter end the management was expecting a growth in disbursements from retail segments due to healthy monsoon. However, later it was realised that the demand was limited only during the festive season. The company would likely continue to deliver muted near-term disbursements because of slowed OEM sales and general weakness in rural India. However, a strong rabi crop might drive higher growth in 4Q. The company seems to have maintained a soft growth outlook over the next few quarters.
We have been tracking the company closely due to its niche offering in rural areas where banks don’t lend, strong execution, reasonable size. Current performance and outlook by the company does not show any signs of growth. We will wait for some growth revival or more margin of safety before we add it in BUY zone.
* Net Interest Income- Total interest earned by a bank on lent amount minus Total interest that it expended on its deposits.
** NPA- Payment not made for more than 90 days
Results: M&M Financial Services reported 7.2% jump in net interest income* and Total income year on year. Operating income before provisions reduced by 0.9% year on year.
Key Highlights:-
Outlook: The management maintains its 15%+ growth target for current fiscal FY20 and confident that the company will continue to gain market due to i) access to capital from strong parentage, ii) less aggression in market iii) better reach in terms of product offering. Despite of the extended monsoon, company does not see any defaults coming from farms. However, they expect low Infra (road, construction) segment related CV volumes to affect the growth and asset quality.
We have been tracking the company closely due to its niche offering in rural areas where banks don’t lend, strong execution, reasonable size. We expect growth to come from rural investment and rural consumption as M&MFS funds CV as well as PV purchases. We seek for some margin of safety before we add the stock to our BUY Zone.
* Net Interest Income- Total interest earned by a bank on lent amount minus Total interest that it expended on its deposits.
** In all rural facing NBFCs, NPA accrue in first two quarters of financial year and decline over other two quarters
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Income | 6,061 | 6,597 | 7,201 | 8,317 | 11,563 | 12,048 | 12,211 | 11,531 | 14,300 | 16,035 |
| Interest Income | 6,021 | 6,554 | 7,146 | 7,884 | 10,372 | 11,885 | 12,111 | 11,318 | 12,700 | 15,797 |
| Other Income ⓘ | 40 | 44 | 54 | 433 | 1,192 | 163 | 100 | 214 | 1,600 | 238 |
| Expenditure ⓘ | 4,661 | 5,373 | 6,363 | 6,412 | 8,723 | 10,446 | 11,505 | 10,002 | 11,440 | 13,447 |
| Interest Expense ⓘ | 2,643 | 2,868 | 3,186 | 3,436 | 4,432 | 5,391 | 5,308 | 4,417 | 5,094 | 6,959 |
| Operating Expenses ⓘ | 1,142 | 1,374 | 1,754 | 1,893 | 2,453 | 2,689 | 2,159 | 2,763 | 3,688 | 4,492 |
| Provisions | 876 | 1,131 | 1,423 | 1,083 | 1,838 | 2,367 | 4,038 | 2,822 | 2,658 | 1,996 |
| Exceptional Items ⓘ | 0 | 0 | 0 | 0 | 0 | 0 | 229 | 21 | -56 | 0 |
| Profit Before Tax ⓘ | 1,400 | 1,224 | 838 | 1,905 | 2,841 | 1,602 | 934 | 1,549 | 2,804 | 2,588 |
| Taxes ⓘ | 475 | 437 | 308 | 689 | 973 | 516 | 154 | 399 | 733 | 645 |
| Profit After Tax | 925 | 787 | 530 | 1,216 | 1,867 | 1,086 | 780 | 1,150 | 2,071 | 1,943 |
| Adjusted EPS (₹) | 9.9 | 8.3 | 5.5 | 11.8 | 18.1 | 10.7 | 6.3 | 9.2 | 16.8 | 15.7 |
| Dividend Payout Ratio (%) | 25% | 29% | 27% | 21% | 22% | 0% | 13% | 39% | 36% | 40% |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
Equity and Liabilities | ||||||||||
| Equity Capital | 5,943 | 6,469 | 6,960 | 9,855 | 11,269 | 11,969 | 15,776 | 16,896 | 18,560 | 19,933 |
| Share Capital ⓘ | 113 | 113 | 113 | 123 | 123 | 123 | 246 | 247 | 247 | 247 |
| Reserves ⓘ | 5,830 | 6,356 | 6,847 | 9,732 | 11,146 | 11,846 | 15,530 | 16,650 | 18,313 | 19,686 |
| Minority Interest | 49 | 68 | 100 | 145 | 79 | 90 | 99 | 141 | 141 | 42 |
| Long Term Borrowings | 17,099 | 20,666 | 25,203 | 39,538 | 54,163 | 64,790 | 62,897 | 60,470 | 75,868 | 92,307 |
| Current Liabilities | 15,121 | 17,204 | 20,203 | 8,473 | 8,616 | 4,365 | 5,883 | 5,350 | 9,769 | 10,632 |
| Trade Payables | 495 | 496 | 607 | 1,138 | 1,148 | 723 | 779 | 1,164 | 1,286 | 1,744 |
| Short term borrowings | 5,259 | 5,218 | 7,141 | 4,866 | 4,381 | 452 | 1,476 | 939 | 5,038 | 5,368 |
| Other Liabilities | -5,754 | -5,714 | -7,748 | -6,004 | -5,529 | -1,175 | -2,255 | -2,103 | -6,324 | -7,112 |
| Total Liabilities ⓘ | 38,212 | 44,408 | 52,466 | 58,012 | 74,126 | 81,214 | 84,656 | 82,857 | 1,04,339 | 1,22,914 |
Assets | ||||||||||
| Non Current Asset | 20,800 | 23,780 | 29,183 | 3,750 | 5,095 | 4,767 | 13,889 | 10,672 | 16,026 | 15,012 |
| Loan Asset | 19,775 | 22,723 | 27,891 | 1,360 | 1,881 | 1,864 | 1,015 | 1,196 | 3,481 | 3,758 |
| Other Non Current Asset ⓘ | 1,025 | 1,057 | 1,292 | 2,389 | 3,214 | 2,903 | 12,875 | 9,476 | 12,545 | 11,254 |
| Current Asset | 17,412 | 20,628 | 23,283 | 54,262 | 69,031 | 76,447 | 70,767 | 72,185 | 88,313 | 1,07,902 |
| Current Investment | 94 | 547 | 576 | 412 | 811 | 3,423 | 26 | 26 | 26 | 151 |
| Other Current Asset | 17,318 | 20,081 | 22,707 | 53,850 | 68,221 | 73,024 | 70,741 | 72,159 | 88,287 | 1,07,751 |
| Total Assets ⓘ | 38,212 | 44,408 | 52,466 | 58,012 | 74,126 | 81,214 | 84,656 | 82,857 | 1,04,339 | 1,22,914 |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
| Cash Flow From Operating Activity ⓘ | -3,970 | -4,957 | -6,467 | -8,510 | -12,078 | -3,115 | 5,826 | 18 | -17,395 | -18,449 |
| Cash Flow From Investing Activity ⓘ | 34 | -440 | -97 | 243 | -1,213 | -2,689 | -8,348 | 3,111 | -1,635 | 2,670 |
| Cash Flow From Financing Activity ⓘ | 3,907 | 5,431 | 6,766 | 8,174 | 13,490 | 6,050 | 2,548 | -3,173 | 18,852 | 16,095 |
| Net Cash Flow ⓘ | -29 | 34 | 202 | -93 | 199 | 245 | 26 | -44 | -179 | 317 |
| PARTICULARS | Mar'15 | Mar'16 | Mar'17 | Mar'18 | Mar'19 | Mar'20 | Mar'21 | Mar'22 | Mar'23 | Mar'24 |
|---|---|---|---|---|---|---|---|---|---|---|
Operational & Financial Ratios |
||||||||||
| EPS (₹) | 16 | 14 | 9 | 19 | 30 | 17 | 6 | 9 | 17 | 16 |
| DPS (₹) | 4 | 4 | 2 | 4 | 7 | 0 | 1 | 4 | 6 | 6 |
| BVPS (₹) | 105 | 114 | 123 | 160 | 183 | 194 | 128 | 137 | 150 | 161 |
Performance Ratios | ||||||||||
| ROA (%) | 2.6 | 1.9 | 1.1 | 2.2 | 2.8 | 1.4 | 0.9 | 1.4 | 2.2 | 1.7 |
| ROE (%) | 16.5 | 12.7 | 7.9 | 14.5 | 17.7 | 9.4 | 5.7 | 7.1 | 11.7 | 10.1 |
| ROCE (%) | 12.2 | 10.8 | 9.1 | 10.4 | 11.7 | 9.5 | 7.9 | 7.5 | 8.8 | 8.8 |
Valuation Parameters | ||||||||||
| Price/Book(x) | 2.4 | 2.1 | 2.6 | 2.9 | 2.3 | 0.8 | 1.6 | 1.2 | 1.5 | 1.7 |
Mahindra & Mahindra Financial Services (Mahindra Finance) began as a captive financier of Mahindra Utility Vehicles in the early 90s. From Mahindra UVs to tractors to non-Mahindra products, the company has diversified into a financial services provider with a whole suite of financial solutions tailored to the under-served customer in under-penetrated rural markets. The equity shares of the Company are listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India. The Company is a subsidiary of Mahindra & Mahindra.
Its product portfolio consists of vehicle finance, which includes financing of passenger vehicles, utility vehicles, tractors, commercial vehicles, construction equipment; and pre-owned vehicles and SME finance, which includes project finance, equipment finance, working capital finance and bill discounting services to SMEs. The company also undertakes mutual fund distribution, fixed deposits and personal loans tailor-made to suit its unique customer set.
Through its subsidiary, Mahindra Insurance Brokers Limited (MIBL), it provides life and non-life insurance products through tie-ups with various leading insurance companies. Another one of it subsidiaries Mahindra Rural Housing Finance, provides loans for home construction, extension, purchase and improvement to customers in rural and semi-urban India. Mahindra Asset Management Company, offers a variety of mutual fund schemes, with a special focus in rural and semi urban areas. Interestingly, its Mutual Fund schemes have been launched with Hindi names, so that investors in rural areas understand the objectives of the schemes better.
Business area of the company
Mahindra & Mahindra Financial Services is a Non-Banking Financial Company (NBFC) engaged in providing asset finance through its pan India branch network.
Products and services offered by the company
Investments
SME Loans
Loans
Insurance
Awards
Milestones:
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MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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