M&M Financial gains 4% and hits a 52-week high on healthy activity in August
Shares of Mahindra & Mahindra Financial Services (MMFSL) hit a 52-week high of 216.75 rupees on BSE, gaining 4% in intraday trading on Monday, after the company recorded strong growth in outflows in August against the backdrop of a positive macro environment.
The Mahindra Group company’s stock surpassed its previous high of Rs 212.70, reached on July 22, 2022. In comparison, the S&P BSE Sensex rose 0.58% to 59,146 points as of 10:38 a.m.
MMFSL said the business continued its momentum with a disbursement of around Rs 3,740 crore, generating 75% year-on-year (YoY) growth.
“Disbursement since the beginning of the year (YTD) is around Rs 17,150 crore and has recorded a year-on-year growth of 104%. This has led to a year-on-year growth of around 12% and sequential growth by approximately 3% month-over-month.cent in gross business assets,” MMFSL said in the August business update.
The company further said that its Stage 2 non-performing assets (NPA) saw a sequential reduction from July 2022, while Stage 3 assets remained stable. The company expects Stage 2 and Stage 3 assets to improve in September 2022.
That aside, collection efficiency (CE) was 96% for August 2022, compared to a CE of 97% for August 2021. The Company continued to benefit from a comfortable liquidity position on its balance sheet, with a liquidity vault over 3 months, said MMFSL.
MMFSL is one of India’s leading Non-Banking Financial Companies (NBFCs), providing quality products and services to a wide customer base in semi-urban and rural areas of India. The Company is mainly engaged in financing the purchase of new and used motor and commercial vehicles, tractors, passenger cars, commercial vehicles, construction equipment and SME financing.
“The NBFC sector is expected to see double-digit loan growth in fiscal 2023, on top of the 6-8% growth expected in fiscal 2022. This will be driven by improving economic activity and strengthening NBFC balance sheets. increased demand in the auto finance segment, which may experience a strong resumption of growth depending on the availability of vehicles, which are facing component shortages due to the pandemic,” MMFSL had stated in its FY22 annual report.
Asset quality measures are expected to improve, supported by the expected improvement in macroeconomic activity, a greater focus on collections and adequate provisioning. However, the performance of the restructured portfolios, as their regular payments begin, and the impact of a possible resurgence of the pandemic are key risks, the company said.
The transition from a favorable interest rate environment in fiscal 2022 to a rising interest rate scenario in fiscal 2023 would impact additional borrowing funding costs between lenders . While NBFC’s balance sheet has sufficient liquidity to sustain funding costs for some quarters, the cost of additional borrowing is likely to increase for capital market instruments and bank funding, he said.
See Bias: Positive
Support: Rs 212
Objective: Rs 240
The stock has been trading with a positive bias since early April 2022 and has since recorded higher highs and higher lows.
With today’s strong move, the stock is trading firmly above the upper end of the Bollinger Band on the daily chart. The short-term bias for the stock is likely to remain bullish as long as the stock holds above Rs 212.
On the upside, the stock has some resistance around Rs 218 – which is the upper end of the Bollinger Band on the weekly chart, above which the stock can potentially rally up to Rs 240 – the monthly chart shows. .
(With contributions from Rex Cano)