Citi has reiterated its buy rating on Mahindra & Mahindra Financial Services (M&M Finance) with a target price of ₹292 per share, citing progress in the company’s efforts to strengthen controls, compliance and asset-quality management. The stock is currently trading at ₹260.05.
The brokerage noted that M&M Finance is driving improvements in risk and collections management through greater centralisation and verticalisation. It said the company has set medium-term targets of pre-provision operating profit (PPOP) to average assets under management (AUM) at 4.0–4.5%, return on assets (RoA) of 2.1–2.2%, and return on equity (RoE) of 15%.
On business growth, Citi said the company is guiding for low-teens expansion in its vehicle financing portfolio, with tractors and refinancing expected to outpace other segments. Beyond vehicle finance, management aims to expand non-vehicle segments to 25% of AUM by FY30, targeting a compound annual growth rate (CAGR) of more than 40%.
Citi also highlighted measures taken by the company to reduce asset-quality volatility. While a rise in coverage and recent floods in certain geographies could weigh on near-term performance, the brokerage said the composition of the commercial vehicle (CV) portfolio does not expose the company to heightened stress risks.
Overall, Citi sees M&M Finance as well-placed to deliver on its growth and profitability metrics, with diversification into non-vehicle lending providing a long-term structural boost.
Disclaimer: This article is based on brokerage views as cited. The views expressed are those of the brokerage and do not represent investment advice.
