This Mid Cap Mahindra Group Stock Set To Rally, Hits 52 Week High, ICICI Securities Says Add

HDFC Securities placed an "Add" call on Mahindra and Mahindra Financial Services Limited (MMFS) with a target price of Rs 256 per share. Given the target price, the brokerage claims a 9% potential upside from its current level. It is a mid cap Mahindra Group company that operates in the NBFC sector. It has a market capitalisation of Rs 29,127.62 crore.

Stock outlook & Returns

On NSE, the stock of MMFS last traded at Rs 235.75 per share. The stock hit a fresh 52 week high on 3 January 2023 at Rs 247 apiece, whereas, the 52 week low it recorded on 7 March 2022 at Rs 128 apiece, respectively.

The stock performed well in terms of return over the year, however, it gave a 2.24% negative return in 1 month. It gave 17.64% positive return in 1 year, respectively. Over the past 1 year, it has given a maximum of 52.74% positive returns. The stock has fallen 29.68% in 3 years and 51.32% in 5 years, respectively.

Buy for a target price of Rs 256 apiece

Mahindra and Mahindra Financial Services (MMFS) has disclosed that the RBI has revoked the ban imposed on the company from using third-party agencies for repossessions. This will likely further boost the already improving asset quality. Separately, MMFS continues to report robust growth of ~22% / 4% QoQ in disbursements / AUM respectively in Q3FY23 and improvement in gross stage 2/3 (GS2/3) assets to 8.5% / 6.2% from 9.7% / 6.7% in Q2FY23. As such, the company is on the path to achieve its Vision 2025 goals of gaining 2x AUM growth, <6% GS-3 and ~2.5% RoA.

The brokerage said, "We revise our target price to Rs256 (earlier: Rs237) based on a higher FY24E P/B multiple of 1.6x (vs 1.5x earlier). There is room for further increase in the multiple given the company's long-term 1-year forward P/B average of 1.9x. Rerating of the stock will depend on sustained higher growth (leverage remains low due to lower growth in the past) given that FY24E RoE still remains <13%. Risks include higher-than-anticipated provisions, NIM shrinkage and an uncertain macro-environment impacting rural demand."

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.