The shares of this leading automobile manufacturer gained by 3 percent to ₹2,568.50 on the National Stock Exchange after Bofa Securities raised the target price on the stock from “neutral” to a “buy” rating with an upside potential of 21%.
On Friday, at 1:20 p.m, Mahindra & Mahindra Ltd. shares were trading at ₹2,503 per share, up 0.34 percent from the previous close price on the stock exchange. The company has a market capitalization of ₹3,11,273 crore.
Mahindra Group is one of the largest groups, with a presence in over 100 countries. It enjoys a leadership position in farm equipment, utility vehicles, information technology, and financial services in India and is the world’s largest tractor company by volume. It has a strong presence in renewable energy, agriculture, logistics, hospitality, and real estate.
At the end of the financial year 2024, M&M saw an increase in its SUV market share to 20.4%, a rise of 130 basis points. Additionally, its Light Commercial Vehicles segment witnessed a substantial increase of 350 basis points, reaching a market share of 49%. Moreover, M&M experienced a growth of 40 basis points in its tractor market share, which reached 41.6%.
A leading investment banking arm of Bank of America and global broking firm, BoFA Securities’ latest note upgraded the Mahindra & Mahindra stock to Buy from Neutral with a revised target price of ₹3,050 from the current price of ₹2,524 representing a 21 percent increase.
BoFA Securities is optimistic about the growth prospects of Mahindra & Mahindra (M&M) over the next 12-18 months, noting several catalysts for growth. The company’s primary business, particularly its market share in the SUV segment, remains robust, and there are signs of potential improvement in its tractor business as well.
BoFA Securities suggests that M&M’s subsidiaries are poised to play a significant role in the company’s future trajectory. Highlighting the subsidiaries’ strong management, ambitious growth strategies, and commitment to sustainability, the brokerage sees them as key positives.
At the current valuation, BoFA Securities considers M&M’s consolidated price-to-earnings multiple of 19x to be favorable. They project a compounded annual growth rate (CAGR) of 18% for the company’s consolidated earnings per share (EPS) with a target return on equity (RoE) of 20%.
Examining Mahindra & Mahindra Ltd.’s financial performance, revenue has grown by 9.2% annually from ₹32,456 crore in Q4FY23 to ₹35,452 crore in Q4FY24. Similarly, net profit has increased by 4.2% from ₹2,994 crore to ₹3,125 crore during the same period.
Over the past six months, Mahindra & Mahindra Ltd. shares have surged by 52%, and over the past year, they have appreciated by 90%.
Written by Omkar Chitnis
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
