In intraday trades on Thursday, shares of Mahindra & Mahindra Financial Services (Mahindra Finance) rose 3% to Rs 240.60 on the BSE after the Reserve Bank of India (RBI) lifted restrictions on the business that barred it from engaging in any recovery or repossession activity through outsourcing agreements.
The stock increased 2% to Rs 238.05 at 09:52 AM compared to a 0.111% fall in the S&P BSE Sensex. On January 3, 2023, the stock reached a 52-week high of Rs 247.05.
The RBI had ordered the business to immediately stop performing any recovery or repossession activities through outsourcing arrangements, until further instructions, as of September 22, 2022.
Mahindra Finance said in an exchange filing that the RBI informed the company via letter dated January 04, 2023 of its decision to lift the aforementioned restrictions imposed on the company with immediate effect based on the submissions made by the company and its commitment to improve its outsourcing arrangements, recovery practises, and accountability framework as per its board-approved action plan.
Mahindra Finance shares beat the market during the past three months, rising 20%, compared to the S&P BSE Sensex’s 4.4% rise. The stock has increased 30% over the last six months, compared to a benchmark index rise of only 14%.
On the strength of a favourable macroeconomic climate, Mahindra Finance announced a high disbursement number for December 2022, increasing 67% year over year (YoY) at Rs 4,650 crore. Disbursements for the third quarter ended in December (Q3) was over Rs 14,450 crore and increased by 80% year over year. The YTD disbursement, which totaled over Rs 35,750 crore, saw a YoY jump of 95%.
In the current month and quarter, Stage-3 and Stage-2 assets have witnessed a sequential improvement. As of December 31, Stage 3 assets are anticipated to be at around 6.2% and Stage 2 assets at around 8.5%, the business stated in an exchange filing.
Mahindra Finance kept releasing solid disbursement figures that showed robust underlying demand and market share increases. A strong collection efficiency is anticipated to lead to additional improvements in asset-quality measures. The business also intends to expand its non-vehicle finance share in the SME, LAP, and digital markets, as well as diversify its growth drivers. According to analysts at Sharekhan, the profits trajectory is likely to favourably surprise in the future, driven by robust business development and a moderation in credit costs. The brokerage company maintains its Buy recommendation on the stock and has a steady Rs 275 price objective.