Mahindra Finance ~ Rural Focused NBFC

sujay85 · November 18, 2021, 7:07pm

Hitesh ji’s opinion on M&M Finance as a techno-funda pick.

In the techno funda style too there are certain long term picks which can be held for long periods of time. A recent buy in my portfolio has been M&M finance. Its a sort of unlock trade. Idea here is to look for companies with good business model and good management which was severely affected by Covid. And now with Covid receding (hopefully) these are the very companies which would start coming out of the woods and show good business momentum.

MM fin was affected severely by Covid second wave and had to make big provisions in first quarter because of NPA norms. In q1 concall management was quite confident of reversing these provisions going ahead. And that’s exactly how it has played out in q2. With reversal of provisions, the numbers reported for q2 appear very good. This reversal of provision should progress into next 2-3 quarters as well though to a lesser degree. With improvement of asset quality coming through, next target for management should be to focus on AUM growth and that is expected to be seen in FY 23.

Reading and researching MM Fin has been a great experience in looking at turnarounds in the financials. First all the information needed is out there with presentations, annual reports etc. Plus the management in its concalls tends to spell out the oncoming scenario quite well and its easy to visualise how they plan to go ahead.