M&M Financial Services Results inline at P&L front; Slippage rise BUY :Emkay

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M&M Financial Services

Results inline at P&L front; Slippage rise

BUY

CMP: Rs638                                        Target Price: Rs800

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n     MMFS’ results inline with expectation with NII at Rs3.3bn and net profit at Rs1.0bn

n     NII grew by 27.1%yoy to Rs3.3bn driven by 5%qoq growth in AUM’s to Rs158.7bn, albeit NIM’s contracted by 288bps qoq to 9.3% on expected lines

n     Asset quality deteriorated sharply as the GNPA increased by 23.5%qoq to Rs6.8bn and with inadequate provisioning net NPA almost doubled sequentially to Rs1.4bn

n     Have lowered our FY12E/FY13E estimates by 7%/1.4% for lower spreads. Expect 29% CAGR in earnings over FY11-13E. Return ratios robust at ~3.8% RoAs and 23% RoE