M-;M Financial Services stock touches 52-week highÂ

12 Jul 2022 , 02:22 PM

A robust business outlook caused shares of Mahindra & Mahindra Financial Services (MMFSL) to rise 3% in Tuesday’s (12-07-2022) sluggish trading to a 52-week high of Rs 206.85 on the BSE. 

The Mahindra Group Company’s shares increased over the previous record high of Rs. 206.40 sets on November 9, 2021. The S&P BSE Sensex, in contrast, was down 0.50 percent at 54,125 points at 11:49 a.m.

MMFSL has gained 18% so far in July (during the previous eight days), vs a 2% increase in the S&P BSE Sensex. With the help of macroeconomic tailwinds, the firm increased disbursement at close to Rs 3,750 crore by 115% year over year and 27% sequentially month over month in June 2022.

The total distribution for the year, which was roughly Rs 9,450 crore, increased by 145% year over year. According to the corporation, total assets as of June 30 were estimated to be Rs 67,500 crore, up 6% year over year.

The corporation also claimed that its stage 2 assets have improved since March 31. The business anticipates stage 3 assets to be somewhat higher as of June 30 than they were at the end of March.

“Along with the continued rebound observed in sectors peers, stocks like MMFSL are probably going to perform better in the upcoming trading days. During the important support level of Rs 170-180 in early April and May 2022, the stock experienced strong delivery-based activity. Since this stock has been accumulating over the past several weeks, we think the downside is limited and the bullish momentum will likely continue above the given levels “ICICI Securities stated.

One of the top non-banking financing firms (NBFCs) in India is MMFSL, which serves a large customer base in semi-urban and rural regions. The company’s main line of business is financing small and medium-sized businesses (SME) as well as the acquisition of new and used tractors, passenger cars, commercial vehicles, and utility vehicles.

In addition to the 6—8% increase anticipated for FY22, the NBFC industry is anticipated to generate a double-digit loan growth in FY23. This will be fueled by an increase in economic activity and strengthening NBFC balance sheets.

Asset quality measures are anticipated to improve, underpinned by the anticipated recovery in macroeconomic activity, a tighter emphasis on collections, and proper provisioning, according to MMFSL.

Key risks, however, include the impact of a hypothetical pandemic revival and the performance of restructured portfolios as and when their monthly payments start.

“With COVID-19, NBFCs are witnessing an increase in demand for used car loans. Some of the factors driving the rise in demand for used automobiles include the widespread desire for second and third cars among households, upgrades by two-wheeler owners to used cars, and the reduced cost of used cars. NBFCs that provide loans for old cars have high hopes for the current fiscal year’s quick growth “In its annual report for FY22, MMFSL stated.