Nuvama Institutional Equities has maintained a ‘Hold’ rating on M&M Finance, keeping the target price at ₹280, following a weak Q4FY25 marred by low disbursal growth, elevated credit costs, and a sharp fall in yields.
In Q4, net profit declined 37% QoQ to ₹563.1 crore, while NII grew just 6% YoY and 1% QoQ. The company took a one-time yield hit of 30 bps QoQ, due to a change in interest charging methodology from disbursement to sanction date, fully booked in Q4.
Disbursals declined 5.7% QoQ, while AUM grew 17.4% YoY. Operating expenses remained high at 2.9%, and credit cost rose to 1.5% versus near-zero in the previous quarter. Despite strong other income and fee growth (up 20% QoQ), PPOP fell 1% QoQ.
Nuvama expects credit cost to remain in the 1.3–1.7% range through cycles and warns that opex may continue to hover near the upper band of management’s 2.7% threshold.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
