Buy Mahindra and Mahindra; target of Rs 1015: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Mahindra and Mahindra

M&M’s EBITDA margin at 11.9% (PLe: 12.3%) contracted 60bps QoQ owing to commodity cost pressues, chip supply issues and weak product mix. Tractor segment’s EBIT margin was at 17.3% (-140bps QoQ), while auto business posted EBIT margins of ~3.7%. Company is experiencing good traction in automotive segment, with an order book of ~155k units (~70k units for XUV700). However, unprecedented demand for new models and semiconductor shortage is causing longer waiting periods. Management highlighted that Feb-22 has seen chip shortage issue easing out and it has worked out strategies for its alternative multi-sourcing. However, tractor business is entering a cyclical slowdown and is expected to remain under pressure in coming quarters. Management also targets to bring down cost base by ~300bps, thus aiding the margin profile.

Outlook

We remain positive on M&M’s growth prospects as (1) automotive segment will benefit from strong product pipeline, strong order book and easing supply issues (2) market leader will benefit from gainig traction in farm implements space and (3) better product mix, benign commodity environment and price hikes will lead to margin improvments. We increase our FY23/24 EPS by 3/4% to factor in volume growth and cost control initiatives. Maintain ‘BUY’ at a TP of Rs 1,015 (at 18x core business).

More Info

At 13:36 hrs Mahindra and Mahindra was quoting at Rs 845.65, up Rs 21.00, or 2.55 percent.

It has touched an intraday high of Rs 847.65 and an intraday low of Rs 820.85.

It was trading with volumes of 55,628 shares, compared to its thirty day average of 115,542 shares, a decrease of -51.85 percent.

In the previous trading session, the share closed down 3.42 percent or Rs 29.20 at Rs 824.65.

The share touched its 52-week high Rs 978.90 and 52-week low Rs 725.00 on 17 November, 2021 and 28 July, 2021, respectively.

Currently, it is trading 13.61 percent below its 52-week high and 16.64 percent above its 52-week low.

Market capitalisation stands at Rs 105,130.58 crore.For all recommendations report, click here

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