Mahindra Finance up 6%, hits 52-week high on healthy disbursements in Nov

The company recorded a disbursement of approximately Rs 4,500 crore in November 2022, delivering a 75 per cent YoY growth, on the backdrop of positive macro environment.

Shares of Mahindra & Mahindra Financial Services (Mahindra Finance) hit a 52-week high at Rs 243.60, on surging 6.4 per cent in Monday’s intra-day trade in an otherwise weak market after the company announced it recorded a disbursement of approximately Rs 4,500 crore in November 2022, delivering a 75 per cent year on year (YoY) growth, on the backdrop of positive macro environment.

The stock of Mahindra Group non-banking finance company (NBFC) surpassed its previous high of Rs 235, touched on September 15, 2022. At 10:53 am, the stock traded 6 per cent higher at Rs 242, as compared to 0.42 per cent decline in the S&P BSE Sensex. The average trading volumes at the counter jumped over three-fold with a combined 9.3 million shares changing hands on the NSE and BSE.

The NBFC's year to date (YTD) disbursement stood at approximately Rs 31,050 crore, registered a YoY growth of 99 per cent. Healthy disbursement trends have led to a strong gross asset book of approximately Rs 76,300 crore, growing around 3.4 per cent over September 2022. This has resulted in growth of approximately 17.5 per cent compared to March 2022.

The collection efficiency (CE) was at 96 per cent for November 2022 as compared to 94 per cent recorded in the same period last year. Mahindra Finance said that the stage 2 assets as at November end experienced a sequential reduction compared to October 2022 and is estimated below 9 per cent, while stage 3 assets remained stable at lower than 7 per cent as at month end. The company expects further improvement in stage 2 and stage 3 assets during December 2022, it added.

Gross non-performing assets (GNPA) (as per income recognition, asset classification and provisioning norms) it is estimated to be higher than stage 3 asset by approximately Rs 1,200 crore, reconfirming the management belief that no additional provisions may be required over and above the expected credit loss (ECL) provision for FY23, Mahindra Finance stated in the press release.

Meanwhile, analysts at Prabhudas Liladher in September quarter results update said that Mahindra Finance’s asset growth has come back and we are witnessing asset growth beginning to happen and it's not happening through just any single product or it's not happening through any single geography and therefore it's an outcome of the country across the product growth that we have seen. Barring taxi segment especially aggregators, company sees robust demand with increasing customer cashflows and positive macro indicators.

Management has said that impact of RBI ban of repossession will be limited only to 2,000/3,000 vehicle per month. It has held healthy discussions with the regulator and is positive that the ban will lifted soon. The company has launched a settlement scheme which whereby customers’ whose vehicles were to repossessed will be allowed for a settlement of account. The company has also migrated about 6,000 employees on its roll under contract, the brokerage firm had said in conference call highlights.

Tech View

Outlook: Positive

Target: Rs 268

Support: Rs 233

M&M Financial Services' stock breached above the higher end of the Bollinger band on the daily (Rs 233), weekly (Rs 237), and monthly (Rs 225) charts last Friday, and has extended its gains today. The stock hit a fresh 52-week high of Rs 243.6 on Monday, supported by heavy volume. If it is able to hold the momentum, then Rs 233 will become its immediate support, followed by Rs 225. 

Going ahead, the stock may hit Rs 255.5-mark, followed by Rs 268, as per the yearly Fibonnaci chart, as it has the support of price-to-moving average action and momentum oscillators. 

However, the stock has marginally entered the 'overbought' zone on the RSI-14 indicator of the daily chart, which needs to be watched by investors.

(With inputs from Nikita Vashisht)