Rural Economy Outlook

I expect the next economic boom to come from the Rural India.

Which makes me Bullish on the business model of Mahindra and Mahindra Financial Services (M&MFIN/MMFS).

Rural has proved in this scenario that they’re better-off in a pandemic scenario backed by a solid demand.

The company serves 400,000 villages out of total 650,000 villages in India (62% market share). And this share is not expected to be snatched away soon.

The company focuses on Customer-based Lending rather than Asset-based Lending. So instead of checking the Borrower's Credit Score, they check the “Social Score”. The relationship managers have been trained to emotionally bond with the borrowers, unlike other mainstream-bankers wanting to get the remaining Pie.

Such customer-centric approach is rare in Banking especially when you know the customers aren’t driving a Mercedes but a Mahindra Tractor.

With the Monsoon at normalcy this year, the Agriculture and Rural is set to do well. Given the business already in place and running a Monopoly in the interior-India, this business model of is set to do well in the Medium to Long term.

Disclaimer - This is a commentary on the Business Model and not Financial Performance.