Shares of Mahindra & Mahindra Financial Services surged over five percent on Monday as the company reported a strong business update for August.

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“In August 2021, the business continued its momentum with a disbursement of more than Rs 2,000 crore for the second month in a row,” Mahindra & Mahindra Financial Services said in a regulatory filing.

The total disbursement at around Rs 2,150 crore, was up about 57 percent on-year due to a low base. The collection efficiency further improved to around 97 percent in August from 95 percent in July.

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CLSA Asia Pacific Markets said monthly disbursals have also improved and are gradually approaching pre-Covid levels.

The foreign brokerage firm has increased its FY23/24 earnings per share estimates by 4-9%, and also hiked its target price by nearly 17 percent to Rs 210.

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Improved asset quality metrics could lead to a multiple rerating, CLSA added.

With opening of the economy and improved mobility, the company witnessed a meaningful reduction in the non-performing asset contracts during the month as customer cash flows improved. Mahindra & Mahindra Financial Services expects this trend to continue in September and the coming months.

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At 09:45 IST, shares of Mahindra & Mahindra Financial Services were up 2.4 percent at Rs 169.15. It touched an intraday high of Rs 174.30.

The stock gave a total return of nearly 24 percent in the last one year, thereby sharply underperforming the Sensex returns of 52 percent.