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MMFS is one of India’s leading NBFCs with gross loan book of Rs 1.15 lakh crore with network of 1,370 branches.

The company finances various segments, including tractors (11%), commercial vehicles and construction equipment (22%), PV and UV (41%), pre-owned vehicles (12%), SME (5%) and Others (9%).

MMFS continues to expand into new categories beyond vehicles, focusing on SME lending, leasing, insurance, payments, mortgages & cross-selling.

As a result, there is an improvement in the NIM, which, over the mid to long-term, is expected to benefit in the form of asset diversification and fee income.

The company has secured an exclusive lending partnership with M&M for its electric vehicle portfolio.

Additionally, they have partnered with RBL Bank for credit card services and tied up with IDFC Bank for Fast Tag services.

With the RBI entering a rate cut cycle, the NBFC sector is expected to benefit in FY26.

Thus we expect MMFS’ NIM to expand to the management’s long term target of 7.0% in FY26 itself (from 6.7% in FY25E).

With a revival in rural demand, we expect MMFS to witness a positive trend across all its products especially the tractor and UV segments.

Management has guided for mid to high- teen loan growth in FY26.

We expect loans/PAT to grow by 15/24% CAGR over FY25-27E. ROA/ROE is expected to improve from 2.0%/12.3% in FY25E to 2.3%/15.8% in FY27E on the back of expansion in NIM and moderation in opex.

We value MMFS at 2.0x (10 year average) FY26E P/BV and arrive at target price of Rs 370

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SEBI Registration number is INH00000176