Buy Mahindra and Mahindra Financial; target of Rs 375: Motilal Oswal
Moneycontrol • 10 days ago
Key Investment Pillars
- AUM growth: Expected to grow at 16-18% in the medium to long term, driven by core vehicle lending and diversification into mortgages, SME lending, and leasing.
- Contained credit costs: Credit costs are expected to remain within 1.3-1.7%, supported by disciplined underwriting, granular risk monitoring, and a healthy portfolio performance.
- Improving operating efficiency: Cost-to-income ratio has declined, reflecting improved operating efficiency and disciplined cost management.
- Diversification strategy: The company plans to expand into affordable housing, loan against property, and select prime housing segments, which could lead to incremental growth.
Thesis Validation Checklist
- AUM growth: Monitor AUM growth trajectory to ensure it is in line with the expected 16-18% growth rate.
- Credit costs: Track credit costs to ensure they remain within the guided range of 1.3-1.7%.
- NIM: Monitor NIM to assess the impact of rising CoF and limited pass-through flexibility.
- Fee income: Watch for any changes in fee income, particularly from insurance distribution, which could be affected by proposed regulatory changes.