Buy Mahindra and Mahindra; target of Rs 3643: Motilal Oswal

Motilal Oswal's research report on Mahindra and Mahindra

In this note, we present the key insights from Mahindra & Mahindra (MM)’s Annual Report. Some of the company’s key achievements from the Auto segment in FY25 include: 1) a 210bp YoY rise in revenue market share to 22.5%; and 2) a segment RoCE of 45.2%. MM’s similar achievements in the FES segment included market share improvement of 170bp+ to reach a record high of 43.3%, with improved profitability. Going forward, in the auto segment, the company intends to: 1) fortify its leadership in the ICE SUV segment, aided by a healthy launch pipeline that includes 23 new products by 2030 across SUVs and LCVs; and 2) target an improved contribution from eSUVs to 20-30% of its portfolio by 2027. In tractors, MM aims to: 1) further strengthen its domestic market share while maintaining its profitability; and 2) target a quantum growth in farm machinery by investing in new products and brand building.

Outlook

While management has outperformed its targets of earnings growth and RoE of 18% each for FY24 and FY25, it remains committed to delivering 15-20% EPS growth and 18% RoE. These ensure sustained profitability and shareholder value. We reiterate our BUY rating with a TP of INR3,643 (based on Jun’27E SoTP).