Reduce Mahindra & Mahindra: target of Rs 2700: Emkay Global Financial

Emkay Global Financial recommended reduce rating on Mahindra & Mahindra with a target price of Rs 2700 in its research report dated February 08, 2025.

Broker Research

February 12, 2025 / 21:50 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Emkay Global Financial's research report on Mahindra & Mahindra

M&M registered a strong Q3, on expected lines, with ~20%/21% revenue growth in the auto/farm segments, respectively. M&M logged auto volume growth of 16% YoY to 245K units, wherein it saw 20%/7% YoY growth in SUVs/LCVs to 142K/67.5K units, respectively. Also, Auto/Farm EBIT margins improved by ~120bps/260bps YoY to 9.7%/18.1%, on operating leverage. M&M has given guidance to a strong 15% growth in the domestic tractor industry for Q4FY25 (~7% in FY25), to be supported by positive macros. M&M reiterated its stance of combined sales of ~5K units per month for BEVs, with bookings commencing from 14-Feb. Revenue from BEVs would be booked under a separate subsidiary (MEAL), while M&M will book only the contract manufacturing/conversion margins. During the ramp-up phase, MEAL’s profitability is likely to be impacted by heavy depreciation (on product development spends), though variable margins for BEVs are likely to eventually reach ICE margin levels as volumes scale-up.

Outlook

We raise FY25E EPS ~2% to factor in the stronger tractor industry; FY26E/27E EPS is maintained. We retain REDUCE and keep our SoTP-based TP of Rs2,700 unchanged, as the ICE-SUV product cycle has largely played out and given the intense launch action in the E-SUV space.

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