Buy Mahindra and Mahindra: target of Rs 760: ICICI Direct

ICICI Direct is bullish on Mahindra and Mahindra recommended buy rating on the stock with a target price of Rs 760 in its research report dated November 11, 2020.

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November 12, 2020 / 18:10 IST

26 Aug, 2025 12:21

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ICICI Direct's research report on Mahindra and Mahindra

Mahindra & Mahindra (M&M) reported a healthy operational performance in Q2FY21. Standalone net sales were at Rs 11,711 crore (up 5.7% YoY), with ASPs in automotive rising 1.6% QoQ to Rs 7.03 lakh/unit in tractor segment rising 1.9% QoQ to Rs 5.19 lakh/unit. Standalone EBITDA in Q2FY21 was at Rs 1,890 crore with corresponding EBITDA margins at 16.1% (up 358 bps YoY). The margin performance was attributable to lower other expenses (down 287 bps YoY), employee costs (down 50 bps YoY). Auto segment posted ~30 bps increase in EBIT margins YoY to 4.3% while tractor margins were up strongly by ~510 bps YoY to 24.4%. Consequent standalone PAT came in at Rs 77 crore. PAT came in substantially lower as the company took a large impairment hit of Rs 1,150 crore on certain long-term investments.

Outlook

We expect sales, adjusted PAT to grow at 8%, 36.2% CAGR, respectively, in FY20-23E. Continued demand traction for tractor segment along with ongoing focus on responsible capital allocation helps us maintain our constructive stance on M&M. Accordingly, we retain our BUY rating on M&M, valuing it at Rs 760/share on SOTP basis (7.5x FY22E EV/EBITDA for base business; 30% holding company discount to its investments).

For all recommendations report, click here