Mahindra & Mahindra (M&M) had its ratings reaffirmed by ICRA Limited on September 29, 2025. The ratings reflect M&M's strong financial profile, healthy cash flows, and diversified business sectors. The stock responded positively to the news.
ICRA has reaffirmed the long-term rating at [ICRA]AAA (Stable) and the short-term rating at [ICRA]A1+ while assigning ratings for enhanced amounts. The ratings reaffirmation reflects the company's strong financial profile, characterized by healthy free cash flows, diversified business across various sectors, healthy profitability in its core automotive and tractor businesses, and superior liquidity with sizeable cash and bank balances along with liquid investments.
| Instrument | Previous Rated Amount (₹ Crore) | Current Rated Amount (₹ Crore) | Rating Action |
|---|---|---|---|
| Non Convertible Debenture Programme | 500.00 | 500.00 | [ICRA]AAA (Stable); reaffirmed |
| Long Term - Non-fund based facilities | 42.50 | 6.25 | [ICRA]AAA (Stable); reaffirmed |
| Short Term - Non-fund based facilities | 400.00 | 643.75 | [ICRA]A1+; reaffirmed and assigned for enhanced amount |
| Total | 942.50 | 1,150.00 |
The ratings favorably factor in the performance of the farm equipment (FES) and automotive (auto) segments, which have provided stability to the overall profitability over the years, despite cyclical performances in the respective segments. M&M also has a large investment portfolio of its Group entities, some of which are listed in the stock markets. The high market value of these investments provides cushion to M&M's overall financial flexibility.
M&M has maintained its dominant position in the domestic tractor industry, with a market share of 45.1% in Q1 FY2026 (June 2025) compared to 43.3% in FY2025. ICRA believes that the multi-brand strategy of Mahindra, Swaraj, and Trakstar, along with the new range of OJA, is likely to help it sustain its market share over the medium term. In its global FES business, M&M is present in four out of the five largest tractor markets in the world.
In the domestic utility vehicles (UV) business, despite increasing competition, M&M has emerged as the second-largest player (in terms of volumes) with its market share improving to 22.7% in Q1 FY2026 (June 2025) from 19.7% in FY2025 and 18.2% in FY2024. This was supported by healthy demand for its new launches like XUV 3XO and Thar ROXX, among others. M&M also enjoys a strong position in the light commercial vehicle (LCV) goods market (especially 2-3.5 tonnes (T) segment), with a 50.7% share in Q1 FY2026 (June 2025) compared to 48.9% in FY2025.
ICRA also notes that the board of directors of M&M has approved the acquisition of around 58.9% stake in SML Isuzu Limited with a total expected investment of ₹554.00 Crores. Additionally, it will make an open offer to acquire up to 26% stake from public shareholders for ₹584.90 Crores. The proposed acquisition is a step towards establishing a strong presence in the > 3.5 T commercial vehicle (CV) segment.
M&M has capital expenditure (capex) plans of ₹20,000.00-25,000.00 Crores towards auto and farm segment over FY2026 and FY2027, to be funded by internal accruals and existing cash and liquid investments. Although the planned investments are large, steady cash flow generation from its core business, along with the financial flexibility enjoyed by the Group and its comfortable credit profile partly mitigate the risk. M&M was net debt free at the standalone and consolidated levels (excluding Mahindra & Mahindra Financial Services Limited (MMFSL)) as on March 31, 2025. ICRA expects its leverage to remain low in the medium term.
ICRA draws comfort from M&M's track record of successfully managing its portfolio of businesses; however, its continued success while maintaining its strong credit profile would remain a key rating sensitivity. Sustained strengthening of M&M's UV portfolio through new product launches amid increasing competition, achieving success on its electric vehicle (EV) launches, and sustenance of its performance would remain critical for maintaining its credit profile.
The Stable outlook reflects ICRA's expectations that M&M will maintain its healthy credit profile, supported by its leadership position in the domestic tractor industry and improving position in the domestic UV industry. While there could be short-term aberrations due to inherent cyclicality in the tractor as well as automotive segments.
The ratings reaffirmation reflects the company's strong financial profile, characterized by healthy free cash flows, diversified business across various sectors, healthy profitability in its core automotive and tractor businesses, and superior liquidity with sizeable cash and bank balances along with liquid investments.
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