Mahindra Finance's net profit for Q2 FY25 experienced a significant decline due to subdued disbursements and high credit costs.
The company's quarterly performance was supported by improved realizations, although the tractors and commercial vehicle segments faced challenges, resulting in a muted outlook for loan growth.
Despite these challenges, the margin remained stable due to a better product mix, and there are expectations that credit cost volatility will decrease, positively impacting return on assets.
The medium-term outlook is more favorable, driven by potential triggers such as the China plus strategy and protectionist measures in the tyre industry.
However, valuations are considered expensive, leading to a cautious stance.
Mahindra Finance currently has a market cap of ₹33,106 crore and is rated as "Overweight" with a current market price of ₹268.