Citi has maintained its ‘Neutral’ rating on Mahindra & Mahindra Financial Services with a target price of ₹300/share, citing a cautious outlook amid rising operational costs. The company remains focused on scaling up its mortgage and SME lending businesses while expanding its presence in leasing and payments solutions. Management has guided for 5-7% disbursement growth and high-teens AUM growth for FY25.
Citi noted that M&M Finance has introduced profitability targets at the branch level, with desired IRR levels driving growth. However, operating expenses remain elevated, with the opex-to-assets ratio at 2.7% and an upward bias of 10 basis points as the company aggressively expands its geographical footprint. Citi also flagged that an equity raise could be evaluated in H2FY25 to support its expansion plans. While Citi acknowledges the company’s strategic efforts to diversify, it remains cautious about near-term cost pressures and competitive dynamics, which may weigh on overall profitability.
