Buy Mahindra and Mahindra; target of Rs 4,450: Choice

Choice's research report on Mahindra and Mahindra

M&M delivered a robust financial performance this quarter, reflecting continued execution of its focused strategy in core Automotive and Farm businesses. Standalone revenue rose 21% YoY, led by strong traction in both segments, Automotive up 18% YoY and Farm up 31% YoY. The Automotive segment remained the key growth engine, supported by the company’s ongoing Utility Vehicle (UV) premiumisation strategy. While the Auto segment volume grew 13% and SUV volume increased 7% YoY, the corresponding revenue growth outpaced volume expansion, underscoring a purposeful portfolio shift towards higher-value models and improved realisation per vehicle.

Outlook

We believe the quarter's results demonstrate that M&M’s revenue outperformance is strategically driven by segment mix and pricing power, rather than mere volume expansion. This allows the company to successfully convert its strong topline growth into margin expansion. We have increased our FY26/27E EPS estimate by 2.0/2.0%, factoring in strong growth in Q2FY26. Hence, we maintain our target price at INR 4,450, valuing the company at 25x (unchanged) the average of FY27/28E EPS, along with subsidiary valuation. We reiterate our ‘BUY’ rating on the stock, supported by M&M’s strategic focus on premium product portfolio expansion and anticipated recovery in rural demand.