Mahindra & Mahindra Financial Services share price was down over 5 percent in the morning session on February 3 after the company reported a fall in on-quarter Q3 profit.
The NBFC firm reported a consolidated net profit of Rs 992 crore for the December 2021 quarter, which disappointed investors. It had reported a consolidated net loss of Rs 223 crore in the same quarter a year ago,
The stock was trading at Rs 160.20, down Rs 8.55, or 5.07 percent, at 11am on the BSE. It has touched an intraday high of Rs 164.50 and an intraday low of Rs 156.
The scrip was trading with volumes of 917,833 shares, compared to its five day average of 442,590 shares, an increase of 107.38 percent.
On a standalone basis, the net profit stood at Rs 894 crore in October-December as against a net loss of Rs 274 crore in the same period a year ago. Sequentially, the standalone net profit was down by 13 percent from Rs 1,023 crore in July-September, reports said.
CLSA has retained ‘outperform’ call on the stock with target at Rs 240 per share, an upside of 50 percent from current level.
“Provision write-backs continue but expect a one-time hit in Q4. We have cut our FY22 profit estimates by 42 percent due to one-off, FY23 by 2 percent and FY24 by 6 percent. There will be a one-off hit to credit costs in Q4 on the RBI norms for NPL recognition,” the brokerage firm said.
Citi has a ‘buy’ call on the stock but has cut target to Rs 190 from Rs 210 per share, an upside of 18 percent from current market price. The research firm is of the view that NPA was significantly higher under daily tagging with the company hopeful of large recoveries in Q4. It has cut FY22 profit estimate by 65 percent.
Macquarie on the other hand has a ‘neutral’ call on the stock and has cut target to Rs 175 per share, an upside of 9 percent from current level. The brokerage firm feels that the company is the worst impacted among peers by RBI’s new NPL norms. The firm’s disbursements picked up, but are still below pre-COVID levels.
“The stock lacks near-term triggers but valuation is undemanding. Near-term provisions may remain elevated; NIM holds up well in Q3. We have cut our FY22 EPS estimate by 77 percent to adjust for the large loss in H1 and cut FY23-24 EPS by 21 percent/13 percent as we build higher credit cost going ahead,” it said.
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