Mahindra & Mahindra Financial Services Ltd
(BSE Code: 532720) (CMP: Rs.447.35) (FV: Rs.2) By Nayan Patel
Mahindra & Mahindra Financial Services Ltd (M&M Finance) is a subsidiary of Mahindra & Mahindra Ltd (M&M), India's largest tractor and utility vehicle manufacturer. M&M Finance started its journey in the rural non-banking finance industry two decades back and has steadily diversified its offerings and extended its reach over the years. Today, it is a leading non-banking finance company (NBFC) catering to customers primarily in the rural and semi-urban areas. It provides financing for auto and utility vehicles (UVs), tractors, cars, commercial vehicles (CVs) and pre-owned vehicles. It is also engaged in mutual fund distribution, fixed deposits and personal loans. Mahindra Insurance Brokers Ltd (MIBL), M&M Finance’s subsidiary, distributes insurance products through tie-ups with various leading insurance companies. In the housing finance segment, it has strengthened its operations in Maharashtra, Gujarat, Rajasthan, Tamil Nadu, Andhra Pradesh, Telangana, Chhattisgarh, Kerala, Karnataka, Madhya Pradesh, Uttar Pradesh, Uttarakhand and Bihar through Mahindra Rural Housing Finance Ltd (MRHFL). Through Mahindra Asset Management Co. Pvt Ltd (MAMCPL), it offers a variety of mutual fund schemes with special focus in rural and semiurban areas. Mahindra Finance USA LLC is a joint venture between M&M Finance and a subsidiary of the Rabobank group that offers wholesale inventory financing to dealers and retail financing in USA to purchase Mahindra group products.
M&M Finance has an equity capital of Rs.122.9 crore supported by reserves of Rs.9180.19 crore. The promoters hold 51.19% of the equity capital, FIIs hold 27.51% and Mutual Funds hold 12.09%, which leaves 9.21% stake with the investing public.
During Q2FY19, M&M Finance reported 133% higher
PAT of Rs.381.39 crore on 39% higher income of Rs.2103.27 crore and an EPS of Rs.6.21. During H1FY19, it reported 419% higher PAT of Rs.650.44 crore on 24% higher sales of Rs.4029.11 crore and an
EPS of Rs.10.58. It paid 200% dividend for FY18. Currently, the stock trades at a P/E of 20x and looks attractive for investment based on its financial performance.
Investors can buy this stock with a stop loss of Rs.400. On the upper side, it could zoom to Rs.535-550 in the medium-tolong term.