Shares of Mahindra & Mahindra Financial Services declined as much as 15 percent to a 52-week low of Rs 289.15 on Wednesday, after India's largest tractor financier reported a 66 percent slump in its June-quarter consolidated net profit.

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At 09.28 AM, the stock was down 8.01 percent at Rs 312.90 on the National Stock Exchange, while the Nifty 50 was up 7.25 points, or 0.06 percent, at 11,338.30.

M&M Financial's consolidated net profit fell to Rs 108.50 crore in the three months ended June 30 compared to Rs 322.30 crore in the corresponding quarter previous year. On a standalone basis, the net profit was down by 75 percent to Rs 68.40 crore.

According to Morgan Stanley, the company missed its net profit guidance on the back of higher provisions. The brokerage sees meaningful downside risk to it's earning per share forecast for M&M Financial.

Morgan Stanley has an 'overweight' call on the stock with a target price of Rs 545 per share.

On the passenger vehicles industry outlook, Mahindra Finance said in the exchange filing that small cars and utility vehicles are expected to continue growth. However, muted growth in 2019-20 and 2020-21 shall significantly reduce the 5-year growth projection.

"Growth to remain muted in 2020, marginally improve in 2021 – on account of an increase in price and reduction in mileage. Higher inventory shall continue to exert pressure on OEM sales till inventory levels normalise," it said in the filing.

Mahindra & Mahindra Financial mainly focuses on the rural and semi-urban sector and finances purchase of new and pre-owned auto and utility vehicles, tractors, cars, commercial vehicles, construction equipment and SME financing.

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First Published:Jul 24, 2019 9:56 AM IST