Mahindra & Mahindra Financial Services
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=2350
Printed Date: 20/Apr/2025 at 6:32am
Topic: Mahindra & Mahindra Financial Services
Posted By: nav_1996
Subject: Mahindra & Mahindra Financial Services
Date Posted: 29/Aug/2009 at 4:48pm
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This company looks promising. Pls look at recommendations from HDFC Securities
http://www.valuenotes.com/hdfc/hdfc_mmfs_03Jul09.asp?ArtCd=147100&Cat=C&Id=1334 I will post my comments later. |
Replies:
Posted By: Hitesh Shah
Date Posted: 29/Aug/2009 at 5:02pm
The report dated 2 Jul seems to have been removed from the HDFCSec.com site  .One should see a more recent report http://www.hdfcsec.com/CMT/Upload/ArticleAttachments/MMFSL%20Result%20Update%20-%20Q1FY10.pdf - here . ------------- |
Posted By: hit2710
Date Posted: 29/Aug/2009 at 7:14pm
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The company is a promising play on financial sector at proper valuations at current market price and could be the financial powerhouse in the making from Mahindra stable.
Anand Mahindra has a lot of vision in all his endeavours and I feel this company can be a good portfolio holding which could weather ups and downs of the market. New initiatives like MF business and the wide geographical reach of the company could be very important. It happens to be a preferred financier for maruti vehicles. Only overhang over the stock remains the poor monsoon where the bread and butter business of the company of tractor financing may not show big growth. ------------- Stockmarket is a weird place. For every person who buys a stock there is a person who sells it and both think they are very smart. |
Posted By: Hitesh Shah
Date Posted: 29/Aug/2009 at 8:33pm
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While there's no arguing with the long term story, the current monsoon worries seem to have taken this one down a bit. It is -11.14% down for the month according to Rediff and nowhere near a 52-week high, unlike many other stocks. So this may be a decent pick for a patient investor. One thing I don't like is the M&M tendency to stray. Why do they want to start a mutual fund using this company which seems to have a rural USP? Quite some time ago, I had read about the number of businesses that M&M was into. Many of them are a legacy of the past, but the thing that really got me was a recent claim (about a year or two ago) that http://economictimes.indiatimes.com/articleshow/2821016.cms - M&M wanted to get into movies . ------------- |
Posted By: nav_1996
Date Posted: 30/Aug/2009 at 12:35pm
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Here is my perspective:
Positive 1. Valuation is not demanding at 1.3 BV. 2. Core biz is growing at 25%. 3. Focus on Fee based Biz. Insurance distribution. 4. Home Loan biz has started growing pretty well and is profitable in 2nd yea itself. It has immense potential. 5. Largest pan-India rural and semi-urban biz. 6. MF can be actually positve. If they can be creative and build a brand which sells in rural India. Brand Loyality in pretty strong in rural India. 7. They have managed NPAs pretty well so far. 8. Mahindra's corporate governance is pretty good. 9. Company can be umbrella for all Fin Biz of Mahindra group. 10. They will act as vehicle for banks to achieve their priority sector lending targets. 11. Tractors becoming economically viable replaement for oxes. But biggest driver will be rural focus of government. We have reached a point where food security for growing population is becoming a big concern for policy maker. This wil force govt to provide incentive for farmers. It will come in form of higher support prices for food grains, loan incentives and so on. Whatever may be the policy decision we need food. First time since 60s food security threat is being seriously felt. Negatives: 1. Impact of monsoon and cyclic fluctuations. (This warrants only long term investment. Q-2-Q investors need to keep away from this. 2. Rise in NPAs. (This should be manageable in longer term. Crop faillures can lead to NPAs in specific seasons) 3. Rising disel prices (Very unlikely that fuel prices will not be controlled) |
Posted By: EquityInv
Date Posted: 30/Aug/2009 at 11:06pm
Gross NPAs of MMFIN of last 3 years [FY07 to FY09] are 5.5%,7.6% and 8.7% while net NPAs are 2.5, 2.9 and 2.6%. Is 8.7% Gross NPA an good sign ? NBFCs are taking money from Banks/others and then financing it for business, so if their NPAs are growing [poor assets quality], then how can they achieve growth. Higher NPAs are more than enough to mess up their business.. ------------- One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do – James Rogers |
Posted By: nikhil090
Date Posted: 03/Sep/2009 at 12:41pm
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We must also remember that the NIM for them are in the range of 7-8% and more which should hopefully compensate for relatively higher NPA's. Also they are getting into many allied services also which can become a more sustainable distribution led income stream.. One worrying factor is the reduction in their credit rating by one of the agencies to a level of AA- which is not what I would prefer.. But the opportunity is quite big and Mahindra is a good brand in rural areas.. Also it is currently not at very high valuations so even if it does not work out very well, it will not lead to big losses (their low last year was around 160+) So risk reward may suggest some small exposure and therefore I invested in this |
Posted By: nav_1996
Date Posted: 03/Sep/2009 at 10:11am
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Its ratings are impacted by its parent's ratings.
A couple of more +ves: 1. It has integrated most of the branches by CBS. 2. Intends to roll-out Housing FInance services through out India using its existing office network. 3. Aggressive brand building for tractors helps this company. |