Buy M&M;target of Rs 1337: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss's research report on M&MKey takeaways from the call hosted by Mahindra & Mahindra (M&M) to discuss budget implications of excise duty hike are: (1) M&M will pass on the hike; 2) 4% excise duty increase on Bolero, Xylo, Scorpio and XUV can impact near‐term demand, but in the past consumers have absorbed 3% hike; 3) rural stimulus to aid incomes and help lower excise impact on UV demand; and (4) normal monsoon remains key trigger for tractor demand recovery; other building blocks are in place for a sharp demand recovery (akin to M&HCVs). Management indicated margin will be impacted due to expiration of excise duty benefits at Haridwar plant (in Q4FY16 ~100bps; refer details on page 2). Hence, we revise down our FY17/18E EPS ~5% each. Maintain ‘BUY’ with SOTP‐based TP of INR1,337 (13x FY18E core business; INR346 for other businesses). We estimate EPS CAGR of 17% over FY16‐18 with an upside risk in case of faster recovery in rural demand (UVs/tractor) and stronger response to M&M’s new launches. Strong margin performance during tough times indicates the company’s profitability focus. We maintain ‘BUY/SO’ despite a modest 5% upside from CMP. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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