Shares of Mahindra & Mahindra Financial Services surged over five percent on Monday as the company reported a strong business update for August.
“In August 2021, the business continued its momentum with a disbursement of more than Rs 2,000 crore for the second month in a row,” Mahindra & Mahindra Financial Services said in a regulatory filing.
The total disbursement at around Rs 2,150 crore, was up about 57 percent on-year due to a low base. The collection efficiency further improved to around 97 percent in August from 95 percent in July.
Also Read | Stock Market LIVE Updates: Sensex, Nifty trade higher led by auto, energy stocks; smallcaps outperform
CLSA Asia Pacific Markets said monthly disbursals have also improved and are gradually approaching pre-Covid levels.
The foreign brokerage firm has increased its FY23/24 earnings per share estimates by 4-9%, and also hiked its target price by nearly 17 percent to Rs 210.
Improved asset quality metrics could lead to a multiple rerating, CLSA added.
With opening of the economy and improved mobility, the company witnessed a meaningful reduction in the non-performing asset contracts during the month as customer cash flows improved. Mahindra & Mahindra Financial Services expects this trend to continue in September and the coming months.
Also Read | Expect substantial part of current rise in GNPAs to reverse by March 2022: M&M Financial
At 09:45 IST, shares of Mahindra & Mahindra Financial Services were up 2.4 percent at Rs 169.15. It touched an intraday high of Rs 174.30.
The stock gave a total return of nearly 24 percent in the last one year, thereby sharply underperforming the Sensex returns of 52 percent.