Buy Mahindra and Mahindra; target of Rs 1685: LKP Research

LKP Research is bullish on Mahindra and Mahindra has recommended buy rating on the stock with a target price of Rs 1685 in its research report dated May 29, 2023.

Broker Research

May 30, 2023 / 14:31 IST

buy

26 Aug, 2025 12:21

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LKP Research's research report on Mahindra and Mahindra

M&M reported decent Q4 FY23 numbers wherein the topline was reported at ₹226 bn, a growth of 31.8% yoy and 4.2% qoq. Volumes rose by 17% yoy and realizations went up by about 12.6% yoy. Automotive division revenues came in at ₹164 bn, an increase of 36% yoy led by success of new launches –Thar, Bolero Neo, XUV 7oo, Scorpio variants and XUV 3oo & 4oo as M&M started rapidly catering to the order backlog. Automotive segment reported strong EBIT margins, which rose by 60 bps qoq, (170 bps yoy) to 7.3% due to positive operating leverage, model mix and price hikes. Tractor EBIT margins came in strong at 16.7% which were 10 bps up qoq and 100 bps up yoy. Overall EBITDA margins came in at 13.9% (70 bps jump qoq and 110 bps yoy). Due to low other income reported sequentially, and an exceptional item, PAT came in just 1.4% up. While adjusted for this one-off item, adjusted net profit came in at ₹20.6 bn which was up 77% yoy and 4.5% down qoq.

Outlook

We maintain BUY on attractive valuations; SoTP-based target price stands at ₹1,685 (₹ 1,310 core business valued at 12x rolled over FY25E earnings + subsidiary valuation of ₹375) in line with our assumptions of margin improvement on increase in volumes and value of SUV, 3Ws and LCV segments, decent growth in FES, production increase offering operating leverage, price hikes and prudent cost reduction measures.

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