M&M shares fall 2% despite strong Q1; should you buy, sell or hold?

M&M shares have risen 7 percent since the beginning of the year.

Shares of Mahindra & Mahindra (M&M) slipped as much as 2 percent given the weak market sentiment on July 31. This comes despite the company posting a strong set of numbers for the June quarter and issuing an upbeat outlook for the months ahead.

The automaker reported a 32 percent year-on-year rise in net profit to Rs 3,450 crore for the quarter ended June 30, 2025, driven by healthy demand for its high-margin SUVs and tractors. Revenue from operations grew 26 percent to Rs 34,143 crore, up from Rs 27,133 crore in the same period last year.

M&M’s performance beat Street expectations—a Moneycontrol poll of six brokerages had estimated revenue at Rs 33,471 crore and net profit at Rs 3,112 crore.

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Should you buy, sell or hold the stock?

Morgan Stanley has an 'Overweight' rating on M&M with a price target of Rs 3,668 per share. This implies an upside potential of 14.3 percent from the last close on the NSE. The brokerage highlighted the company’s guidance for an exciting product launch cycle in calendar years 2026 and 2027, with benefits from these launches expected to begin flowing in from early 2026. M&M remains confident of achieving its mid-to-high teen utility vehicle (UV) growth target for FY26. While margins are currently supported by a stronger product mix, Morgan Stanley expects some moderation in the coming quarters. The company is also well covered on rare-earth magnet supply till the end of FY26.

Jefferies maintains a 'Buy' rating on M&M with a higher target price of Rs 4,000 per share. The company has delivered its 13th straight quarter of double-digit EBITDA growth and continues to gain SUV market share, rising to the second position in passenger vehicles. Jefferies expects M&M to clock mid-to-high teen SUV growth in FY26, supported by the launch of three new SUVs in calendar year 2026. It also noted a pick-up in tractor demand. The brokerage considers M&M one of its preferred picks, citing a strong 18 percent core EPS CAGR over FY25–28.

During the post-result earnings call, the Scorpio maker reiterated its SUV growth guidance of mid to high teens for FY26, despite sector-wide concerns over demand sustainability and supply-side disruptions. The management, speaking on an analyst call post its Q1FY26 results, said that the company is well-positioned to meet its targets, backed by a steady stream of launches and tactical product refreshes.

To be sure, M&M's Q1FY26 SUV revenue market share increased to 27.3 percent from 23.5 percent in the previous quarter, the company's investor presentation showed.

M&M shares were trading at Rs3,152, lower by 1.6 percent from the last close. M&M shares have risen 7 percent since the beginning of the year.