Buy Mahindra and Mahindra; target of Rs 1674 : HDFC Securities

HDFC Securities is bullish on Mahindra and Mahindra has recommended buy rating on the stock with a target price of Rs 1674 in its research report dated August 04, 2023.

Broker Research

August 09, 2023 / 11:56 IST

Buy

26 Aug, 2025 12:21

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HDFC Securities' research report on Mahindra and Mahindra

M&M Q1 adjusted PAT came in at INR 21.2 bn, ahead of our estimate of INR 19.3bn, led by better-than-expected margins. The margin surprise was driven by improved performance from the tractor segment. On the back of strong demand for its models, M&M has gained a 200bps share to 18.3% in UVs as of Q1FY24. Also, while industry demand is slowly decelerating, M&M continues to enjoy a healthy order backlog at 281k units. In the upto 3.5T LCV segment, while demand is subdued, M&M has further strengthened its market share to 49% (+480bps YoY). Even in tractors, M&M has been able to gain 20bps share to 42.9% in Q1 with improved profitability. We continue to remain positive on the business momentum, given: (1) a strong order backlog for UVs will help further gain market share; (2) the target to further increase its market share in tractors on the back of new launches; (3) focused strides taken to achieve a strong position in EVs; (4) challenge set for growth gems to grow 5x. While the recent stake buy of RBL posed serious concerns around capital allocation, we believe as long as they continue to focus on their core business segments and work towards achieving their long-term targets, investors should not be too concerned.

Outlook

Maintain BUY, with a revised TP of INR1,674/sh (earlier at INR1,617/share) as we roll forward to June’25 EPS.

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