Buy Mahindra and Mahindra; target of Rs 900: Motilal Oswal

Motilal Oswal's research report on Mahindra and Mahindra

Mahindra & Mahindra (MM)’s FY21 Annual Report highlights that the company has reoriented its focus on growth after tightening its capital allocation policies. Besides listing out the priority areas for the Auto and Farm Equipment Sector (FES) businesses, it explains future growth areas for farm mechanization and shared mobility/logistics. Key insights from the Annual Report are highlighted below. Focus shifts to generating growth after recalibrating capital allocation: Post the successful execution of the ‘Reboot’ strategy, targeting the tightening of capital allocation, MM has shifted its focus to accelerating growth with clearly laid out strategies for the Auto, Farm, Financial Services, and IT Services businesses.

Outlook

Implied Core P/E for MM stands at ~10.2x FY23E S/A EPS and 1.3x Core P/BV. Our Mar’23E-based SOTP Target Price is ~INR900/share (implied Core P/E at ~12.9x at TP). Maintain Buy.

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