Buy Mahindra and Mahindra; target of Rs 3,500: ICICI Securities

ICICI Securitie`s research report on Mahindra and Mahindra

Mahindra & Mahindra’s (M&M) EBITDA margin, at 14.9%, was up ~30bps QoQ (I-Sec est.: 14.3%). Beat in margin was led by FES segment with EBIT margin up 130bps QoQ to 19.4% (I-Sec est.: 17.3%). Auto segment’s EBIT margin was down 50bps QoQ at 9.2%, in-line with our estimate. M&M expects mid-to-high-teen growth for SUVs (including electric models) and high single-digit growth in both the tractor and LCV under 3.5 tonnes segment.

Outlook

We envisage M&M’s strong performance continuing led by its robust UV portfolio and FES segment’s healthier outlook. Upgrade to BUY, from Add, with a SoTP-based TP of INR 3,500 (vs. INR 3,200), implying 24x FY27E core EPS. Change in TP is led by 8%/9% increase in FY26E/FY27E EPS to account for higher volume growth and better margin performance.