Target: ₹350
CMP: ₹317.45
Mahindra Finance has reported a 39 percent increase in core earnings, exceeding estimates by 9 percent. The company’s assets under management (AUM) grew by 12 percent year-on-year, supported by an 11 percent rise in disbursements. The calculated net interest margin (NIM) improved by 70 basis points to 7.3 percent, reflecting favorable conditions on the liability side. Additionally, fees from distribution and insurance activities surged by 44 percent.
However, the increase in provisions by 23 percent resulted in a 55 percent growth in earnings, which was 8 percent below expectations. The ongoing conflict in West Asia is contributing to fuel shortages and rising prices, while the monsoon deficit could pose challenges for the financial year 2027. Despite these macroeconomic headwinds, Mahindra Finance has improved its margins over the past two quarters and continues to enhance profitability through a focus on fee income.
In fiscal year 2026, the company achieved a 12 percent loan growth, alongside a 6 percent increase in disbursements. Strength has been noted particularly in tractor disbursements, while the company has also expanded its presence in personal vehicles (up 15 percent in Q4) and pre-owned vehicles (up 17 percent in Q4). Management has projected a maintenance of growth within the teens or mid-teens, contingent upon macroeconomic conditions.
Analysts are adjusting their estimates upward by 4 to 12.5 percent, reflecting slightly higher anticipated loan growth, improved margins, and less provision requirement following this year’s substantial provisioning. While macroeconomic challenges persist, Mahindra Finance is better positioned than in previous years. Current valuations at 1.4 times book value and 10.4 times earnings for fiscal year 2028 are seen as attractive. Consequently, the recommendation has been upgraded to “Buy,” with the fair value target raised to ₹350 from ₹340.
Published on April 27, 2026
