Buy Mahindra and Mahindra target of Rs 3456 Prabhudas Lilladher

Prabhudas Lilladher's research report on Mahindra and Mahindra

M&M’s Q2FY25 standalone revenue grew by 12.9% YoY, coming in 2%/3% higher than consensus/PLe. The growth in revenue was primarily driven by mix improvement specifically in UVs towards higher end variants while Tractors also reported healthy growth in its ASP. Gross profit grew by 18%YoY while margin expanded by 157bps YoY to 25.8%, benefitting from better operating leverage. EBITDA grew by 30.5% YoY while margin expanded 190bps YoY to 14.2%. Healthy overall performance enabled its PAT to increase by 13.2% YoY. The management retained its guidance to deliver mid-to-high teens volume expansion in its UVs. Given the good monsoon and healthy reservoir levels, the management expects FY25 growth to be 6-7% and remains optimistic for FY26.

Outlook

We estimate its revenue/EBITDA/PAT to grow at a CAGR of 14.5%/20.1%/13.7% over FY24-27E. We retain our ‘BUY’ rating with a TP of Rs3,456 (previous Rs3,458) valuing it at 26.5x on its Sept’26E core EPS and Rs229 for its EV business and Rs411 for its listed subsidiaries.