Hold M&M; target of Rs 1283: SPA Securities

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26 Aug, 2025 12:21

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SPA Securities’ research report on M&MM&M's Q2FY16 results were inline with estimates with topline coming in at ~INR 92 bn, decline of 3.1% YoY, whereas bottomline stood at INR 9 bn, decline of 2.4% YoY. The company has launched 6 new products YTD and 3 more are in the pipeline which are expected to aid sharp recovery in volumes (CAGR of ~18.5% and 7.8% for UVs and LCVs respectively between FY15-17E). We maintain our HOLD rating on the stock with SOTP based target price of INR 1283.Outlook & ValuationAutomobile segment volumes are expected to grow by 15.7% in FY17E primarily led by new launches. On the farm equipment side, tractor volumes are expected to grow at 16.2% in FY17E on the prospects of better monsoon (after 2 consecutive years of tepid rainfall). With increasing competition in the industry coupled with various product launches by the company, we expect decent surge in marketing expenses. For its new UV launches, M&M is expected to keep the price competitive, which is expected to cap upside in margin. We expect revenue & profit to grow at a CAGR of 14.7% & 17.5% respectively between FY15- 17E. Inspite of the positive factors, we maintain our Hold rating on the stock as the CMP prices in all the benefits that may accrue to M&M over the next 2 years. We have a target price of INR 1283 based on SOTP valuation method.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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