M&M Financial share drops 3% on mixed Q1 nos; should you buy, sell or hold?

Mahindra & Mahindra Financial Services share price: Mahindra & Mahindra Financial Services share price was in focus on Wednesday, July 23, 2025, with the scrip dropping up to 2.93 per cent to an intraday low of 257.80 per share, nearing its 52-week low of 235.47.

 

At 9:20 AM, Mahindra & Mahindra Financial Services share was trading 1.75 per cent lower at 260.95. In comparison, BSE Sensex was up 0.30 per cent at 82,429.66 levels.  CATCH STOCK MARKET LIVE UPDATES TODAY 

M&M Financial Q1 results

 

Mahindra & Mahindra Financial Services (MMFS) reported a modest 3 per cent year-on-year (Y-o-Y) rise in net profit to ₹530 crore for the quarter ended June 2025 (Q1FY26). However, on a sequential basis, net profit declined 6 per cent.

 

Total income for the quarter increased 18 per cent Y-o-Y to ₹4,438 crore, while total expenses rose at a faster pace of 22 per cent to ₹3,744 crore. 

 

Net interest income (NII) grew 18 per cent Y-o-Y to ₹2,285 crore. However, credit costs spiked to ₹660 crore from ₹448 crore in the same period last year.

 

Disbursements for the quarter came in at ₹12,808 crore, registering a 1 per cent Y-o-Y rise but falling 18 per cent sequentially. The company attributed the sequential dip to a slowdown in the underlying wheels business. The gross loan book expanded 15 per cent Y-o-Y to ₹1.22 trillion and grew 2 per cent quarter-on-quarter.

 

Its MSME asset book grew 28 per cent Y-o-Y to ₹6,523 crore as of June 30, 2025, led by secured products like Loan Against Property (LAP), which now forms 44 per cent of total SME assets, up from 33 per cent last year. 

 

Stage 3 assets in this segment stood at 1.4 per cent, reflecting strong asset quality. Collection efficiency improved slightly to 95 per cent, up from 94 per cent in Q1FY25.  ALSO READ | Paytm shares hit 52-week high after posting Q1; check investment strategy

 

Brokerages views on M&M Financial Services   Motilal Oswal

The company reported an operationally soft quarter with tepid disbursements and loan growth, according to analysts at Motilal Oswal. Asset quality weakened seasonally due to elevated credit costs, higher slippages, and persistent write-offs. 

 

On the positive side, net interest margin (NIM) expanded about 10 bps Q-o-Q, and management remains confident that NIM has bottomed out and is poised to improve. 

 

While loan growth and credit costs remain uncertain, a projected PAT CAGR of about 21 per cent over FY25–27 and RoA/RoE of 2.2 per cent/13 per cent in FY27E support a ‘Buy’ rating with a target price of ₹310 (1.6x Mar’27E BV). The M&M Financial stock is currently trading at 1.3x FY27E P/BV.

Nuvama

Those at Nuvama said, M&M Financial beat estimates on NII and pre-provision operating profit (PPOP), but missed on credit costs, which came in at 1.9 per cent – above the guided 1.5-1.7 per cent range. 

 

Still, given a tough operating environment and stable Stage 3 ECL at 51.4 per cent, the outcome is seen as acceptable. Disbursements remained weak (up 1 per cent Y-o-Y / down 18 per cent Q-o-Q). Reported spread improved 20 bps Q-o-Q, and PPOP rose 19 per cent Y-o-Y / 11 per cent Q-o-Q. PAT grew 3 per cent Y-o-Y but declined 6 per cent sequentially. Stage 2+3 ECL remained steady at 78.8 per cent versus 78.4 per cent Q-o-Q.  

Thus, analysts at Nuvama maintained a ‘Hold’ rating with a target price of ₹280 (1.6x FY26E BV), with growth momentum and credit cost normalisation as key monitorables.