Morgan Stanley has maintained an Equal-Weight rating on Mahindra & Mahindra Financial Services (M&M Finance), setting a target price of ₹285 per share, indicating a moderate upside from the current market price of ₹269.30.
The brokerage highlighted that the company’s Q3 PAT exceeded expectations, primarily due to a sharp cut in Stage 3 coverage from 59.5% to 50%. However, rising slippages and lower provision coverage ratio (PCR) guidance of 51-54% remain concerns.
Morgan Stanley also flagged higher-than-expected credit costs for FY26-FY27, estimating them to exceed the guided range of 1.3-1.5% on average assets. As a result, the firm has trimmed its FY26 EPS estimates, even with a PCR assumption below 45%.
Despite the earnings beat, Morgan Stanley remains cautious on asset quality trends, indicating limited upside potential for M&M Finance.
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