Result update Mahindra & Mahindra Financial Services:: NIRMAL BANG

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Q3FY’12 Result update
Mahindra & Mahindra Financial Services Ltd.(MMFSL) announced
numbers better than expectation with a net profit of Rs.154.7
crore compared to Rs.115.9 crore during Q3FY’11. The Net
Interest Income for the quarter stood at Rs.417.8 crore
compared to Rs.339.1 crore during Q3FY’11.
Highlights of the result
Immune to the general slowdown in the automobile markets:
The company’s financial performance for the quarter and
the nine months period, coupled with the management’s
optimistic outlook clearly highlight the fact that the
company is immune to the slowdown in the automobile
markets.
Performance aided by CV segment: The company’s overall
strong performance is aided by relatively higher contribution
from the CV segment.
Cashflows in rural areas continue to be bouyant: The
company’s cash collection efficiency as well as dealer
feedback does not suggest slowdown of any kind in the rural
automobile markets.
Adequately funded for the next 18 months: The company’s
capital adequacy ratio is strong at 17 per cent plus levels
and therefore, does not need to shore up the capital atleast
for the next 18 months.
Valuation & Recommendation
We expect the company to post a Net Interest Income of Rs.1522
crore for FY’12E and Rs.1743.6 crore for FY’13E. The net profit
for FY’12E and FY’13E is expected to be Rs.554.4 crore and
Rs.671.6 crore respectively. The EPS for FY’12E and FY’13E
should be Rs.53.3 and Rs.64.6 respectively. We expect the
company to trade at 2.3x FY’13E Adj. book value to arrive at a
price target of Rs.830 over the next 6 to 9 months