Buy Mahindra and Mahindra; target of Rs 1590: Emkay Global Financial

Emkay Global Financial's research report on Mahindra and Mahindra

M&M reported in-line results in terms of revenue and margin, though Company logged a ~42% beat at the PAT level due to higher ‘other income’. While we are unenthused about the recent RBL Bank investment amid appreciable capital allocation focus over the past few years, current valuations (~14x core FY25E PER) remain supportive amid relatively limited volume growth prospects in base businesses (we build ~8%/~5% volume CAGR in Auto and Farm segments).

Outlook

We introduce FY26 estimates and upgrade FY24E/FY25E EPS by ~9%/~7% to reflect the Q1 margin performance and outlook (FY23E-25E Core EPS CAGR: ~14%); we maintain BUY on M&M, given the undemanding valuations (~14x FY25E standalone core PER). Our SOTP-based TP stands at Rs1,590/share (Rs1,500 earlier; incl. Rs470/sh for subsidiaries/investments).