Accumulate M&M; target of Rs 1428: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking`s research report on Mahindra & Mahindra

“Mahindra & Mahindra (M&M)’s 2QFY2015 results were in line with our estimates, primarily due to higher other income and lower taxation even as the operating performance lagged estimates. Revenues grew 6% yoy to Rs9,178cr, led by 5% growth in realization each in the automotive and the farm equipment segment. Volumes remained flat on a yoy basis. EBIDTA margin, at 12%, declined 250bp yoy and was significantly lower than our estimate of 14.1%. Higher employee expenses due to new wage regulations by Maharashtra government, higher discounting and product launch expenses impacted the company’s operating performance. However, higher other income at Rs490.6cr (35% yoy growth) due to increased dividend from subsidiaries and lower taxation (tax/PBT at 21.5%) boosted the profitability. Net Profit, at Rs974cr, declined 5% yoy and was in line with our estimate.” “M&M’s volumes are likely to remain under pressure in 2HFY2015 given the weakness in both the automotive (due to lack of products in the compact UV space and due to subdued LCV sales) and the farm equipment space (due to poor sentiments on back of lower sowing). M&M is however likely to witness volume recovery over the next two years (FY2016 & FY2017) in both the automotive and the tractor industry. In the automotive segment, M&M aims to introduce two new utility vehicles over the next one year in the compact space (where so far it has very limited presence) enabling it to regain market share. Further, other automotive segments, ie LCV and three-wheelers, are likely to witness recovery in FY2016 on back of improvement in the economy. We also believe that the tractor industry growth would revive in FY2016 on back of increased non-agri usage of tractors and higher MSPs. Further, M&M’s margins are likely to improve in FY2016 on back of operating leverage and reduction in discounts. We have reduced our FY2015/16 estimates marginally given the volume and margin pressure in the near term. However, given the improved outlook FY2016 onwards, we maintain our positive view on the company and retain our Accumulate rating with a revised SOTP based target price of Rs1,428,” says Angel Broking research report.      

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