M&M shares extend fall as UBS stays 'neutral' despite strong Q3 show

M&M was the best-performing Nifty company in 2024, delivering a massive 83 percent return.

Shares of Mahindra and Mahindra slipped 1.4 percent to Rs 3,093 in early trade on February 11, extending losses for a second session in a row, after international brokerage UBS maintained its 'neutral' call on the stock despite the company's better-than-expected third-quarter earnings.

With a price target of Rs 3,460, UBS analysts forecast an upside potential of 10.2 percent from the last close on the NSE. This comes just a day after M&M shares briefly hit a record high before closing over 2 percent lower largely led by the prevailing weak sentiment.

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The brokerage does not expect new EV booking numbers to surpass previous Mahindra launches, citing high sticker prices and EV limitations that could restrict the target audience. However, UBS still anticipates M&M’s EVs to garner less than 70,000 bookings—a record given the EV industry’s current annual volume of under 140,000 units. It also expects M&M's initial EV supply to be below 5,000 units per month. UBS does not foresee any risk of cannibalization of the company’s internal combustion engine (ICE) models.

On the other hand, HSBC has retained a 'buy' call and does not see downside risks to growth expectations, supported by M&M's strong SUV order book. It expects the SUV business to continue outperforming the industry in FY26. Additionally, the tractor segment will likely see better growth, particularly in southern India. Despite the overall weak demand in the passenger vehicle segment, HSBC appreciates M&M’s diversified business model.

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The Scorpio SUV manufacturer reported a 19 percent year-on-year rise in net profit to Rs 2,964 crore for the December quarter, up from Rs 2,490 crore in the same period last year. The auto major also posted a 20 percent increase in revenue from operations, coming at Rs 30,538 crore in Q3FY25, up from Rs 25,383 crore in Q3FY24.

Rising farm incomes bolstered tractor demand for the company while strong sales of the XUV 3XO and the five-door Thar SUV helped M&M navigate an otherwise challenging year for Indian carmakers. Meanwhile, the company also raised its growth guidance for the tractor segment to 7 percent for FY25, up from the previous 5 percent.

At about 9:20 am, shares of the company were trading at Rs 3,114, lower by 0.72 percent from the last close on the NSE. M&M was the best-performing Nifty company in 2024, delivering a massive 83 percent return.

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