Mumbai – Shares of Mahindra & Mahindra Financial Services (M&M Finance) declined by nearly 3% on July 23 after the company reported a 6% quarter-on-quarter drop in net profit for the first quarter of FY26. The muted performance triggered cautious responses from brokerages, with the stock trading around ₹258 during afternoon hours.
The company posted a Q1 FY26 net profit of ₹530 crore, down from ₹563 crore in Q4 FY25. On a year-on-year basis, however, profit rose by 3% from ₹513 crore in Q1 FY25. Despite the dip in profitability, M&M Finance saw its net interest income (NII) grow by 18% YoY to ₹2,285 crore, and by 6% QoQ.
Net profit margin narrowed to 11.93% in Q1 FY26, compared to 13.27% in Q4 FY25 and 13.64% in Q1 FY25. Disbursements also showed mixed performance — increasing 1% YoY but declining 18% sequentially to ₹12,808 crore.
Tractor disbursements stood out with a 21% YoY growth, while business assets rose 15% YoY to ₹1.22 lakh crore. The company’s collection efficiency improved slightly to 95%, reflecting customer repayment stability.
🔍 Brokerages Weigh In
- Macquarie maintained an Underperform rating with a target price of ₹235, signaling a potential downside of over 11.5% from the last closing price of ₹265.55. The firm flagged higher credit costs as a key concern and projected sustainable return on assets (RoA) to remain below peers.
- UBS issued a Neutral call, trimming its target price to ₹285, indicating a potential upside of over 7%. UBS noted that while net interest income and pre-provision operating profit (PPoP) exceeded expectations, the profit after tax missed estimates due to credit cost pressures.
While M&M Finance projects mid-teen growth rates in the medium term, challenges in the entry-level passenger vehicle and commercial vehicle segments may weigh on near-term performance.
The stock has declined over 1% in the past month and nearly 4% over the past six months, but gained 87.5% over the last five years. Its current price-to-earnings (P/E) ratio stands at 16.58.
