Buy M&M; target of Rs 1440: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan`s research report on Mahindra and Mahindra“After a positive surprise on margins in Q1FY2015, Mahindra & Mahindra (M&M) reported a disappointing operating performance in Q2FY2015. A sharp increase in overheads led to a 233BPS sequential margin contraction to 12.0% and below our estimate. However, the fall in the operating profit was compensated by a 36% rise in other income leading to a net profit of Rs974 crore in-line with our expectation.” “The automotive segment has been a laggard for M&M over the past six quarters given the weak consumer sentiment and its absence in the fast growing compact UV segment. While the launch of the new Scorpio should stabilise volume at current levels, any meaningful growth will only be visible post the new launches in CY2015. Meanwhile, the strong growth momentum in the tractor segment has been affected by the subpar monsoon rains. However, M&M has maintained its leadership position in the segment while actually gaining market share.” “Given the weak demand in the tractor segment we have further cut our volume estimates. Additionally, prompted by the management commentary on pressure on the margins due to higher discounts, wage increases and new launch expenses, we have cut our earnings estimates for FY2015 and FY2016 by 5.8% and 4.7% respectively. However, we remain positive on the stock given its leadership position in the domestic tractor and utility vehicle segments as well as value derived from subsidiaries across business segments. We maintain a Buy recommendation on the stock with a sum-of-the-parts (SOTP)-based price target unchanged at Rs1,440,” says Sharekhan research report. 

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