Mahindra and Mahindra shares rose over 5 percent on May 17 to Rs 2,501, a record high, following brokerage ratings and target price upgrades after strong Q4 results. The Street's bullish sentiment on M&M stock is driven by a promising growth outlook in the auto segment and a potential recovery in the farm equipment business for FY25.
M&M reported a 32 percent on-year jump in net profit to Rs 2,038 crore, riding on auto performance, favorable product mix, and operating leverage benefits. The homegrown automaker’s standalone revenue from operations rose 11 percent on-year to Rs 25,109 crore.
Follow our live blog for all the market updates
Jefferies has upgraded M&M stock raring to 'buy' from 'hold', and has hiked the target price to Rs 2,910 from Rs 1,616, implying an upside potential of 23 percent from the current price. The international brokerage believes that valuations are still 20 percent lower than the peer average. This is largely due to the rapidly expanding utility vehicle portfolio and capacity.
Morgan Stanley maintains its 'overweight' call on the M&M stock and expects the Thar-maker to remain the fastest-growing passenger vehicle manufacturer in FY25. It also forecasts an improvement in the farm business of the company.
The management also said that its farm business, which has been facing challenges for the last couple of quarters, could see an improvement in the second half of FY25. Factors such as 'above normal' monsoon, expected recovery in farm output, and robust growth in agricultural exports are key enablers of recovery along with the government's infrastructural push and credit availability.
Nuvama Institutional Equities has also retained its 'buy' call on the counter. It has, however, hiked the price target to Rs 2,760. It expects M&M to post a 14 percent revenue CAGR over FY24–26E, driven by 15 percent growth in the auto segment and 9 percent in the farm segment, driven by expected better monsoons and favorable government policies.
Emkay, with a 'buy' recommendation on the stock, suggests that the demand outlook for both of M&M's key segments is promising, with strong growth anticipated in SUVs due to new launches, and a potential rebound in tractor sales following a period of consolidation. Emkay has upgraded its earnings estimates for FY25 and FY26 by 8 percent each, reflecting the company's sustained market share gains in SUVs and an improved outlook for tractors.
On the other hand, CLSA has downgraded the stock to 'sell' from outperform as it believes that the stock is fairly priced after the recent rally. M&M shares have rallied nearly 30 percent in the last three months.
On May 16, the company announced it would invest Rs 12,000 crore in its electric vehicle (EV) unit, Mahindra Electric Automobile from FY25-27.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
