M&M sees demand boost, private capex revival amid income tax relief, interest rate cut

M&M share was the top-performing Nifty stock in 2024, rising a massive 84.5 percent.

Mahindra & Mahindra management anticipates a twin boost to demand as the Union Budget 2025 cut income tax up to Rs 12 lakh and the Reserve Bank of India lowered interest rates by 25 basis points after an 11-consecutive pause—both moves aimed at putting more money in consumers' hands and driving consumption.

"The relief in taxation for the middle class creates a demand stimulus, which will, in turn, translate into greater private sector capex," the company's management said after its Q3 earnings earlier in the day. While M&M has maintained steady capital investments over the years, the broader private sector has lagged in fresh capex—a gap that could narrow with improved demand, they noted. The management further added that the demand had lagged for a long time and expects the income tax cut to provide some relief.

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Apart from this, M&M's board has decided to adopt a revamped financial reporting framework starting the fourth quarter of this fiscal, aiming to enhance transparency around its electric vehicle (EV) operations. The auto giant plans to restructure its reporting to clearly distinguish EV manufacturing costs and margins across various segments, to demarcate into the performance of its evolving electric mobility business.

During the quarter, the Thar major reported a 19 percent rise in net profit at Rs 2,964 crore for the quarter ended December 31, 2024, driven by strong demand for its sport utility vehicles and tractors. It reported a net profit of Rs 2,490 crore in the year-ago period. The auto major reported a 20 percent rise in revenue from operations at Rs 30,538 crore in Q3FY25 as against Rs 25,383 crore in Q3FY24.

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Rising farm incomes have helped boost tractor demand, while surging demand for its 'XUV 3x0' model and a five-door version of its popular 'Thar' SUVs have helped Mahindra sail through an otherwise turbulent year for Indian carmakers.

M&M shares closed at Rs 3,198, higher by nearly 2 percent from the last close on the NSE. M&M share was the top-performing Nifty stock in 2024, rising a massive 84.5 percent.

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