Mahindra Finance Q4 Results Review - Process Enhancements To Help Recover From Fraud Setback: Motilal Oswal

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Mahindra and Mahindra Financial Services Ltd.’s Q4 FY24 profit after tax declined ~10% YoY to Rs 6.2 billion (15% miss). Adjusted for provisions on Mizoram fraud, PAT would have been Rs 7.2 billion (inline). FY24 PAT fell 11% YoY to Rs 17.6 billion. Net interest income stood at Rs 18.1 billion (in line), up ~13% YoY. Other income rose ~30% YoY to ~Rs 1.6 billion, driven by better fee income.  Credit costs at ~Rs 3.4 billion included provisions of ~Rs 1.36 billion related to fraud in Mizoram. Annualized credit costs stood at ~1.4% (flat QoQ).  Core NIM (calculated) expanded ~15 bp QoQ. Including non-interest income, net total income (as % of assets) expanded ~30 bp QoQ to 7.1%.  To full-proof the system against even such frauds of extreme collusion, Mahindra Finance has started accelerating process improvements, including heightened due-diligence for customer onboarding and centralized verification of customers. We expect Mahindra Finance to use the levers on product mix and fee income to deliver a ~25 bp YoY improvement in NIM. Benefits from the ECL provision release and a decline in write-offs will also result in improvement in credit costs. We estimate a CAGR of 16%/40% in assets under management/PAT over FY24-FY26, with FY26E return on asset/return on equity of 2.4%/17%.Retain Buy with a revised target price of Rs 325 (based on 1.8 times FY26E book value per share). .Key risks:Muted yields because of higher competitive intensity and increasing proportion of prime customers,benefits of credit cost decline not coming through because of higher provisioning requirement..Click on the attachment to read the full report:.M&M Financial Q4 Results: Profit Falls 9.5%, Misses Estimates.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Mahindra Finance Q4 Results Review - Process Enhancements To Help Recover From Fraud Setback: Motilal Oswal

Earnings miss due to high provisions; reported net interest margin up 30 bp QoQ

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Mahindra Finance Q4 Results Review - Process Enhancements To Help Recover From Fraud Setback: Motilal Oswal

Earnings miss due to high provisions; reported net interest margin up 30 bp QoQ

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