Broker’s call: M&M Financial (Buy)

Three years into its digital transformation journey, Mahindra & Mahindra Financial Services (MMFS) has successfully embedded its flagship ‘Udaan’ programme across lending, servicing and collections verticals. By migrating the customer journey from a low-tech high-touch model to a high-tech high-touch one, MMFS has started witnessing tangible operational benefits such as expanded market share at existing dealer counters, an enhanced cross-sell ratio, and a reduction in TAT to 1–2 days vs 8-10 days earlier.

Further, leveraging proprietary scorecard model built on over 3 decades of historical data, MMFS expects to stabilise its overall credit cost within 1.3-1.7 per cent in FY27, demonstrating strong structural resilience, despite temporary headwinds from ongoing geopolitical situation.

Alongside process enhancements in onboarding, underwriting and collection, MMFS strategically remained focused on capitalising on its extensive customer base of over 12 million clients.

We believe, given that the digital optimisation remains an ongoing exercise, the same will likely ensure structural improvement in return ratios, going forward.

Key risks: Cyclical nature of vehicle finance impacting AUM growth; and spreads sustaining at lower-than-guided levels.

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