The shares of this automobile company gained up to 1.18 percent after a well-known brokerage recommended a ‘buy’ rating.
With a market capitalization of Rs 2.05 Lakh crore, the shares of Mahindra & Mahindra Ltd closed at Rs 1,655.40 per share, fell around 0.05 percent as compared to the previous closing price of Rs 1,656.30 apiece.
Looking into Mahindra & Mahindra’s performance, revenue increased by 15 percent from Rs 29,870 crore in Q2 FY23 to Rs 34,436 crore in Q2 FY24. During the same period, net profit decreased by 17 percent, from Rs 3,021 crore to Rs 2,484 crore.
Motilal Oswal, one of the well-known brokerages in India, gave a ‘Buy’ call on the auto stock with a target price of Rs 2,005, indicating a potential upside of 21 percent from Wednesday’s closing price of Rs 1,655.55 per share.
Here is the reason behind the bullish potential upside target:
● Brokerage estimates domestic Passenger Vehicle (PV) volumes would grow at a 6-7% CAGR between FY23 and FY26E. However, this will be driven primarily by outperformance in SUV numbers and execution of the present order backlog.
● In FY24, the tractor industry faced challenges such as reduced crop production due to unfavorable Navratri timings and lower monsoon levels, resulting in a 3 percent YTD decline in industry volumes. However, FY25 is anticipated to see a recovery with improved stock levels and favorable festive timings.
● Mahindra & Mahindra’s (MM) tractor volumes are projected to achieve a 3 percent CAGR from FY23 to FY26. This growth is expected to be fueled by industry recovery in FY25, new lightweight tractor launches from OJA and Swaraj, and expansion in the export market.
● Motilal Oswal maintains its FY24/25 EPS expectations, with the auto industry expected to be the primary growth engine in the next years. They forecast a revenue/EBITDA/PAT CAGR of 12.5%/ 15%/17% between FY23 and FY26.
M&M sold 3,59,253 vehicles in the Passenger Vehicle (PV) sector, a 59 percent increase over the previous year’s total of 2,25,895 vehicles [including 2,23,682 Utility Vehicles (UVs), 2,154 Vans, and 59 Cars].
Mahindra & Mahindra Ltd is India’s most diverse car manufacturer, with a presence in 2-wheelers, 3-wheelers, PVs, CVs, tractors, and earthmovers.
Written by:- Abhishek Singh
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