Accumulate M&M; target of Rs 1332: Angel

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26 Aug, 2025 12:21

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Angel Broking's report on Mahindra and Mahindra (M&M)

"For 4QFY2015, M&M posted numbers in line of our expectations. For MM+MVML, revenues dipped 9% yoy to Rs 9,123cr, largely in line with our estimate of Rs 8,781cr; owing to a 16% volume decline in the quarter. Automotive volumes dipped 10% while tractor volumes dipped 30%. However, realization/vehicle grew 7% yoy on account of better mix and price hikes and to an extent limited the downslide in the top-line. On the operating front, M&M’s margin of 11% was in line with our expectations of 11.3%. The margin declined 180bp yoy given the huge volume decline and with lower contribution of the high margin tractor business in the mix. During the quarter, M&M realized a one-time gain of Rs 36.4cr on account of profit on sale of long term investments. Adj Profit, at Rs 550cr, largely met our expectation of Rs 572 cr."

Outlook and valuation: M&M is likely to witness volume recovery over the next two years (FY2016 & FY2017) in both the automotive and the tractor segment. In the automotive segment, M&M aims to introduce two new compact utility vehicles with an option of the petrol variant (so far it did not have presence in this space) enabling it to regain market share. Further it plans to launch a small commercial vehicle which would boost share in the commercial segment. We also believe that the tractor industry growth would revive from 2HFY2016 on back of indications of a normal monsoon and increased non-agri usage of tractors. M&M PAT is likely to grow at CAGR of 8% over FY2015-FY2017 period. We have broadly retained our earnings estimates. We maintain Accumulate rating on the stock with a revised SOTP based price target of Rs 1,332", says Angel Broking research report.

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