InvestorQ : M&M Finance reported very strong numbers in the fourth quarter. Can I look to buy the stock at current price levels?
Dilmini Mercia made post

M&M Finance reported very strong numbers in the fourth quarter. Can I look to buy the stock at current price levels?

Answer
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Dhwani Mehta answered.
1 year ago


M&M Finance fourth quarter

The fourth quarter performance of M&M Finance was supported by an 87% growth in net profits to Rs.588 crore with solid performance in its core business of truck financing. During the year, the company expanded its assets under management (AUM) to Rs.67,000 crore largely driven by growth in the truck financing portfolio. The big boost to the performance came from strong recoveries of stuck loans with the gross NPAs of the company falling from 9% last year to around 5.8% in the current year. Of course, that is still a high level of NPAs for an NBFC.

Should M&M Finance be bought at current prices?

While the results in the current quarter may have been attractive showing good growth, we would be cautious on the extent of NPAs at 5.8% and the liquidity issues leading to higher NPAs for most NBFCs. Also, the RBI has promised more stringent regulations in case of NBFCs and a broader framework. One can wait in the sidelines till there is clarity on these issues before buying into this stock.