M&M Financial Services slips 3% post Q3; Street divided on outlook

Mahindra & Mahindra Financial Services shares slipped 2.8 per cent in trade, logging an intra-day low at ₹359 per share on BSE. The selling pressure brokerage remained cautiously optimistic post December quarter (Q3FY26) results.

 

At 9:56 AM, M&M Finance share price was trading 2.15 per cent lower at ₹361.65 per share on BSE. In comparison, the BSE Sensex was down 0.67 per cent at 81,796.59.

M&M Finance Q3 results highlights:

Mahindra & Mahindra Financial Services released its December quarter (Q3FY26) results on Wednesday, after market hours. In Q3, the company’s consolidated net profit came in at ₹824.16 crore, as compared to ₹917.57 crore a year ago, down 10 per cent. 

 

 

The company clarified that the implementation of the new labour code led to an impact of ₹97 crore during the quarter, and added that the profit in the year-ago period included a provision of ₹436 crore.

 

Its revenue from operations stood at ₹6,449.84 crore, as compared to ₹4,796.8 crore year-on-year (Y-o-Y), up 34.4 per cent.  CATCH STOCK MARKET LIVE UPDATES TODAY

Brokerages’ view on M&M Finance 

Nomura | Buy | Target: ₹440

Nomura noted that Mahindra & Mahindra Financial Services reported 13 per cent year-on-year (Y-o-Y) growth in passenger vehicle (PV) asset under management (AUM) for Q3FY26, lagging broader auto industry volume growth, which management attributed to vehicle price reductions from GST cuts and higher demand for entry-level PVs among rural and semi-urban customers. Commercial vehicle (CV) AUM growth remained tepid at 5 per cent Y-o-Y, with management adopting a cautious stance due to elevated stress among small transport operators.  On credit quality, the company refreshed its expected credit loss (ECL) model in Q3, moving away from a 42-month rolling format to a longer-duration assessment more aligned with industry practice, while keeping stage-3 PCR stable at 53 per cent through overlays of ₹630 crore; the quarter also saw technical write-offs pushing overall write-offs 40–50 basis points (bps) higher versus prior quarters, with credit cost remaining benign at 1.5 per cent annualised.

 

Strategically, management is leveraging the company’s strength in rural/semi-urban "Bharat" markets by prioritising faster-growing tractor and PV segments over CV and construction equipment, while planning to diversify the non-wheels business mix to 30 per cent by FY30E—a move that includes a pending decision on whether to merge the housing finance subsidiary into the parent. Nomura assumes mid-teens AUM growth over FY27–FY28 (versus management's mid-to-high-teens guidance), citing multiple strategic initiatives playing out in upcoming quarters.

Emkay Global Financial Services | Reduce | Target raised to ₹320 from ₹300

Emkay noted that Mahindra & Mahindra Financial Services (MMFS) delivered a strong Q3 performance, bolstered by improved yields, better insurance cross-sell driving fee income, falling cost of funds, and benign credit costs. Despite a ₹110 crore one-time drag from labour code implementation, profit after tax (PAT) meaningfully exceeded consensus estimates. 

 

However, management cautioned that this confluence of favourable factors is unlikely to be extrapolated in the near term, with 9MFY26 metrics (7.1 per cent net interest margin (NIM)+Fee, 1.9 per cent return on asset (RoA), 1.3 per cent credit cost on assets) being more representative of near-term trends; the company remains committed to delivering 2 per cent return on asset (RoA) before pursuing higher targets. 

Motilal Oswal Financial Services | Buy | Target: ₹450 

The brokerage said that M&M Finance reported an operationally healthy quarter, with disbursements reaching an all-time high, driven by momentum in tractors and PV amid healthy festive demand, goods and services tax (GST) cuts, and pent-up demand from Aug/Sep’25. 

 

Asset quality also improved, with 30 dpd declining by 50 bps, resulting in lower net slippages. Additionally, NIMs expanded during the quarter, supported by strong fee income and an improvement in the yields.  

 

“M&M Finance currently trades at 1.9x FY27E P/BV. With a projected PAT CAGR of 19 per cent over FY25-28E and RoA/RoE of 2.2 per cent/14 per cent in FY28E,” Motilal said. 

JM Financial Institutional Securities | Add | Target raised to ₹405 from ₹395 

JM Financial said Mahindra & Mahindra Financial Services delivered a healthy Q3. The brokerage expects AUM growth to recover gradually, with management targeting mid-to-high teen growth over the medium term, driven by expansion in MSME and mortgage segments, including a possible merger of Mahindra Home Finance into the parent. Improved confidence on credit costs, stronger non-interest income-led cash flows, and a higher share of fixed-rate loans are seen supporting earnings and NIMs, according to JM. 

 

Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.