MMFS Stock Gets Upgrade: A Promising Investment Opportunity

MMFS Stock Upgrade: What You Need to Know

The stock of MMFS has been upgraded to 'Accumulate' due to its promising sustainable growth and margin outlook in the medium term. The management of MMFS expects a significant increase in disbursement growth in the second half of FY26, driven by a strong uptick in tractor and PV volumes.

Key Highlights

• Q2 Assets Under Management (AuM) grew by 13% year-over-year to Rs1,272.5bn, with a projected growth of 15% for FY26.
• The management expects Net Interest Margin (NIM) to remain stable at around 7% in the medium term, supported by a favorable mix, boost in fee income, and lower Cost of Funds (CoF).
• Although weak asset quality and elevated credit cost may impact profitability in the near term, credit cost is expected to normalize by FY27/28.

Long-Term Prospects

Over the long term, the company expects its Return on Assets (RoA) to improve to around 2.5%, with a projected 2.1% for FY28. We value the standalone business of MMFS at 1.6x Sep'27E P/ABV, resulting in a valuation of Rs359 for the standalone business and Rs16 for subsidiaries.

Investment Recommendation

Based on our analysis, we upgrade MMFS to 'Accumulate' with a target price of Rs375. However, please note that this is not a personalized investment advice, and it's essential to consult with certified experts before making any investment decisions.