The shares of Mahindra and Mahinda Financial Services started the session on a negative note on Thursday and slipped 7.5 percent in intraday trade after the company posted its results for the December quarter.

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The firm reported a consolidated net profit of Rs 992 crore for the third quarter of the fiscal, down 10 percent from Rs 1,103 crore in the September 2021 quarter. On a standalone basis, the net profit stood at Rs 894 crore during the quarter, as against a loss of Rs 274 crore in the year-ago period, according to the company’s release.

Mahindra Finance, which caters to rural and semi-urban customers for buying new and pre-owned auto and utility vehicles, saw its loan disbursals grow by 28 percent during October to December period. There is sequential growth in loan book in the current quarter and the company expects further uptick in disbursements, it said, adding collection efficiency stood at 95 percent for the quarter and 100 percent in December.

Net interest income at Rs 1,580 crore increased by 14 percent year-on-year, reflecting widening of spread, the company said.

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Global brokerage CLSA has an outperform call on the stock with a target price of Rs 240 per share. The brokerage sees a 50 percent upside in the stock, which was quoted at Rs 158.75 on the BSE at the time of writing.

CLSA has cut the FY22 profit estimate by 42 percent due to one-off, FY23 by 2 percent and FY24 by 6 percent. There will be a one-off hit to credit costs in Q4 on RBI norms for NPL recognition, it said.

On the December quarter numbers, the brokerage said, Q3 was a continuation of the recovery cycle that started in Q2.

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Meanwhile, Macquarie said M&M Financial was the worst impacted among peers by RBI’s new NPL norms. It has maintained a ‘neutral’ rating with a target price cut to Rs 175 per share.

According to Macquarie, Mahindra Finance stock lacks near-term triggers but valuation is undemanding. Near-term provisions may remain elevated, it said. The brokerage has cut its FY22 EPS (earning per share) estimate by 77 percent to adjust for the large loss in H1.

At 12:40 pm, Mahindra Finance shares were trading 6.01 percent lower at Rs 158.60 on BSE and were down 6.01 percent on NSE too at Rs 158.85.

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