Buy Mahindra and Mahindra; target of Rs 3,349: ICICI Securities

ICICI Securities is bullish on Mahindra and Mahindra has recommended buy rating on the stock with a target price of Rs 3,349 in its research report dated August 01, 2024.

Broker Research

August 07, 2024 / 11:13 IST

Buy

26 Aug, 2025 12:21

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ICICI Securitie's research report on Mahindra and Mahindra

Auto EBIT margin came in at 9.5% vs. 8.8% in Q4FY24 driven by favourable mix, lower commodity cost and impact of earlier price hikes taking effect. Oder book (OB) stood at 178k (vs. 220k at end-Q4) with Thar/XUV700/Bolero adding fresh orders to the tune of 5k/8k/6k units/month; brand Scorpio adding 12k units//month and 55k open bookings for XUV3XO. M&M has guided for mid-high-teens growth in FY25 based on the favourable response for XUV3XO, expected demand elasticity due to pricing action on XUV700 models and the upcoming Thar five-door launch. Cancellation rate continued at 10% in Q1FY25, similar to Q4 levels. Inventory levels are 4–5 days higher than average and M&M targets to reduce this by increasing retail throughput.

Outlook

Mahindra & Mahindra’s (M&M) EBITDA margin, at 14.9% (up ~200bps QoQ), was 110bps higher than consensus. Auto/FES segment’s EBIT margin was up 70bps/270bps QoQ at 9.5%/18.5%. M&M is planning SUV capacity expansion to 64k units/month by end-FY25, from 49k units (as of FY24-end). The company also has an order backlog of 178k units as of end-Q1. We believe, with the recently launched XUV3XO, monthly UV production levels should move over 45k units/month soon. Maintain BUY with an SoTP-based revised target price of INR 3,349 (earlier INR 3,365), implying 28x FY26E core EPS.

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