Shares of M&M Financial Services jumped over 7 percent in the early trade on Wednesday after the company reported a 14 percent rise in its net profit for the December quarter of fiscal 2020. The scrip touched intraday high of Rs 380 after gaining 7.87 percent against the previous close of Rs 352.25 on the BSE.

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At 10:15 am, the stock was trading 6.90 percent higher at Rs 376.55 on the BSE.

M&M Financial Services Ltd reported 14.6 percent rise in its standalone net profit to Rs 365.3 crore in Q3FY20 as compared to Rs 318.7 crore in Q3FY19. The net profit was higher than CNBC-TV18 poll estimates of Rs 347.5 crore.

The revenue during the quarter increased by 15.7 percent to Rs 2,580.6 crores as against Rs 2,340.4 crores YoY.

Net interest income in December quarter grew 13.9 percent to Rs 1,371.7 crore versus Rs 1,204 crore on year. Net interest Margin at 7.7 percent for 9MFY20 versus 8.1 percent YoY and versus 7.6 percent for H1FY20.

The NBFC’s asset quality deteriorated significantly.

On sequential basis, gross non-performing assets (GNPA) rose 10.9 percent to Rs 5,773.3 crore from Rs 5,203.8 crore while Net NPA increased 6.3 percent to Rs 4,451.9 crore from Rs 4,186.6 crore.

Gross NPA ratio rose to 8.5 percent from 7.2 percent and Net NPA ratio rose to 6.7 percent from 5.8 percent, QoQ.

Housing finance subsidiary GNPA was reported at 17.56 percent as against 16.37 percent on quarter.

Provisions in Q3FY20 stood at Rs 400.1 crore versus Rs 360.7 crore in Q2FY20.

Asset Under Management (AUM) increased 15.7 percent on quarter to Rs 75,884.4 crore largely driven by CV/CE, used vehicles, and tractors loan.

Global brokerage Jefferies maintained ‘Buy’ call on M&M Financial and raised target price to Rs 415 from Rs 405 per share as Q3 profit beat estimates.

Jefferies expects the company should gain from a potential cyclical recovery and its loan mix shift, easing funding cost should support Net interest margin.

It expects that gross NPA has likely peaked for near-term & should improve in Q4.

According to Jefferies, valuations appear attractive at current levels.

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First Published:Jan 29, 2020 10:53 AM IST