Mahindra & Mahindra Financial Services Ltd. share price target

MMFS 4QFY16 results exceeded expectations, even after factoring in seasonal improvement. Strong recoveries led to (1) GNPA decline of ~19% QoQ despite the shift to 120DPD, (2) Calculated NIM improvement of 240bps QoQ, and (3) Lower provisioning requirement (1.1% ann. vs. 3.5% QoQ). Core earnings at Rs 10bn ( 37% QoQ) and net earnings at Rs 3.7bn ( 5.5x QoQ) were 10% and 41% ahead of estimates.

Mahindra & Mahindra Financial Services' (MMFS) 4QFY16 PAT grew by 11% YoY to INR3.7b (44% beat). Led by intense recovery efforts and good performance in bigger states GNPLs improved 210bp QoQ; leading to significantly lower provision...

MMFS is currently at the bottom of a fouryear downcycle (FY1417) and we believeitsbusinessislikelytoseemoderaterecoveryinFY17withafullrecovery likely by FY18. The basis for our belief: (1) disbursementtorepayment ratio has...

MMFS numbers disappointed once again. Sharp NIM compression (led by portfolio mix and interest reversals) and higher provisions (ageing of NPLs and additional provisions from shift to 135DPD) resulted in a sharp drop in net earnings (Rs 672mn, -54% QoQ and 60% below estimates). With 14% rise in new NPL contracts (146k), GNPAs jumped ~13% QoQ to Rs 40bn (10%).

8 PAT came in below expectation due to higher provisioning as NPAs moved to higher bucketsrequiringhigherregulatoryprovisioning Disbursementgrowthpickedupaidedbyfestivedemand.Pickupisnotlikelytosustain...

MMFS results were below estimates given the conservative shift to 135DPD. The move added Rs 2.4bn to GNPA and lowered PBT by Rs 610mn (27% impact). Core earnings were below estimates, led by income reversals (Rs 720mn) and slow AUM growth of 8%. Disbursements were muted, as the focus towards higher recoveries/collections continued.

Disbursement growth may come down further to 58% in FY16, against its earlier guidance of 810%, led by poor monsoon and lack of activity in infrastructure. While business has improved marginally in few states (Bihar,...

increase in previous assetquality deterioration cycle (FY0609). We expect nearterm pressureonassetqualitytopersistledby(1)recentunseasonalrainsinMarch/Aprilinfour states,and(2)sluggishconstructionactivity.Hence,wemaintainourNeutralratingonthe...

MMFS results were way below estimates. With 1Q being a seasonally weak quarter, G/NNPAs jumped 40/56% QoQ on expected lines with deterioration across geographies & segments. While a decline in core & net earnings was expected, the sharp fall of 19/73% QoQ surprised negatively.

Rs8.8bn/Rs3.3bn as against consensus estimates of Rs8.2bn/Rs2.5bn respectively. The 15.8%yoy growth in NII was aided by 52bps yoy increase in NIMs to 9.6%, even as AUM growth remains moderate at 8%yoy. While the lending yields remain stable yoy, penal...