Sharekhan's research repor on Mahindra and Mahindra
Mahindra & Mahindra (MM+MVML) Q1FY21 results were below our as well as street estimates due to lower than anticipated margin performance in automotive segment. The tractor segment’s margins surprised positively with y-o-y improvement. Due to strong farm sentiments, M&M expects tractor industry to grow in FY2021. We expect M&M to gain market share in tractors, Automotive segment is also witnessing recovery due to robust rural sentiments and increased preference for personal transport. Tighter capital allocation strategy of no fund infusion in businesses with an unclear path to profitability will continue and M&M is evaluating the performance of its international subsidiaries. Valuations at 12x core FY22 earnings are lower than long term historical average.
Outlook
We retain Buy rating on the stock with unchanged PT of Rs 750. M&M continues to remain our preferred pick in the automotive space.
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