Hold Mahindra and Mahindra; target of Rs 531: Prabhudas Lilladher

Prabhudas Lilladher recommended Hold rating on Mahindra and Mahindra with a target price of Rs 531 in its research report dated July 14, 2020.

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July 18, 2020 / 17:14 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Mahindra and Mahindra

M&M’s (MM) FY20 annual report focuses on strengthening core business and tightening capital allocation based on renewed management focus on turning around its core/strategic subsidiaries. Losses at key auto/farm subsidiaries have negatively contributed to PAT (-107%) in FY20 largely led by SsangYong (SYMC), MUSA and other 2W subs. MM’s intention to partially/fully exit some of these (SYMC) and scale up ailing ones (like MUSA) can be key catalyst going forward. For FY21 key priorities include: A) work towards turnaround of global operations with launch of new tractor platform ‘K2’ and B) auto business - launch of new products and scale up of gasoline engine. While we like the intention of the management on prudent capital allocation, we would like to see better execution on the same.

Outlook

Hence we maintain Hold with SOTP based TP of Rs531 (unchanged). We value core auto business at 13x (unchanged) plus subsidiary value of Rs106 at 50% holdco discount.