M&M
Mahindra &Mahindra Financial Services has reported disappointing set of numbers for quarter ended 30th June 2015, both on YoY and QoQ basis. Due to mounting provisions of Rs 337 crore in the June quarter, probably the highest quarterly ever for the company, consolidated net profit slipped 37% YoY and 71% QoQ to just Rs. 107 crore, leading to EPS of Rs. 1.90 versus Rs. 6.51 in Q4FY15 and Rs. 3.01 in Q1FY15. Profitability was affected both by reduced income due to lower disbursement and increased credit costs on account of lower collections.
With a networth of 1,124 offices across semi-urban and rural areas of India, company has AUMs of Rs. 37,554 crore, which rose very slowly, at just 2% QoQ, in line with expanding branch network. Unseasonal rains and low economic activity kept operations for the first quarter muted.
Currently share is trading at PBV multiple at 2.5 times, based on BVPS of Rs. 107, as of 30-6-15. While the valuation is at par in relation to peers, future outlook on the company and revenues remains bleak, as the company’s customers continue to face challenging times, given the delayed monsoon and lack of macro optimism in semi-urban and rural India, the heart of company’s operations.