M&MFIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.3

Mahindra Finance shows solid profitability, attractive valuation, and improving operational metrics. While debt levels are high, its strong brand and rural financing niche support long-term growth.

📊 Financial Overview

• Profitability: PAT rose to ₹569 Cr from ₹530 Cr — quarterly growth of 7.4%
• Margins: ROE at 12.3%, ROCE at 9.02% — moderate but improving
• Debt Profile: Debt-to-equity ratio of 4.99 — high but typical for NBFCs
• EPS: ₹18.4 — supports valuation and dividend payout
• Dividend Yield: 2.08% — attractive for income-focused investors

📈 Valuation Metrics

• P/E Ratio: 17.2 — below industry average of 22.6
• P/B Ratio: ~1.9 — reasonable given book value ₹166
• PEG Ratio: 0.52 — indicates undervaluation relative to growth
• Intrinsic Value: Estimated around ₹340–₹360 based on earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: Leading NBFC focused on rural and semi-urban vehicle financing
• Moat: Strong brand association with Mahindra Group and deep rural reach
• Growth Drivers: Tractor and passenger vehicle financing, digital transformation, and cross-selling

📌 Entry Zone Recommendation

• Suggested Entry: ₹290–₹310 — near DMA50 and below RSI threshold
• Technical Indicators: RSI at 75.2 (overbought), MACD positive — short-term caution advised

📈 Long-Term Holding Guidance

• Strong fundamentals and rural financing niche make it a good long-term hold
• Monitor debt levels and asset quality for sustained performance

✅ Positive

• Quarterly profit growth of 54.1%
• PEG ratio of 0.52 — undervalued
• Improving margins and strong brand
• Dividend yield of 2.08%

⚠️ Limitation

• High debt-to-equity ratio (4.99)
• ROCE below industry average
• RSI indicates overbought zone

📰 Company Negative News

• Muted disbursements due to deferred auto sales amid GST cut expectations

  Business Today

🌟 Company Positive News

• Q2 results beat expectations; shares surged 8% to 52-week high

  Business Today

• Strong performance in passenger vehicle and tractor financing segments

  Business Today

🏭 Industry

• Industry P/E at 22.6 — Mahindra Finance trades at a discount
• NBFC sector benefits from rural credit demand and vehicle financing growth

🧾 Conclusion

• Mahindra Finance is a fundamentally strong NBFC with attractive valuation and growth potential
• Accumulate on dips for long-term gains; monitor debt and asset quality

Sources

Business Today

,

The Mahindra Group

,

Motilal Oswal

,

Value Research