The Indian automobile industry is in the midst of a growth phase, projected to reach around $300 billion by 2026. With a CAGR of around 8-9 percent, the market is driven by rising disposable incomes, urbanization, and increasing demand for electric vehicles. Government initiatives and consumer preferences are shifting towards larger vehicles and sustainable mobility solutions.
With a market capitalization of Rs 3,70,111 crore, on Tuesday, the shares of Mahindra & Mahindra Ltd touched a day’s high of Rs. 2,986.15 which is 4.88 percent higher than the previous closing price of Rs. 2,847.05 apiece. The stock reiterated to Rs. 2,976.30 from the day’s high. This stock has delivered around 91 percent return in the past year and thus outperformed the nifty index in the same period.
Brokrage Reccomdation:-
CLSA, one of the globally reputed brokerages firm, gave an ‘Outperform’ call on the stock with a target price of Rs 3,440 apiece, indicating a potential upside of 20.8 percent from Tuesday’s closing price of Rs 3,440 per share.
Brokerage rational:-
As per the brokerage’s recent engagement with Mahindra & Mahindra, the management indicated strong confidence in the company’s growth which is driven by a pipeline of new model launches expected to boost sales in FY25-26.
M&M has shifted its passenger vehicle portfolio over the past five years, increasing the SUV mix from 35 percent to 55 percent, with a focus on mid and premium segments.
Consumer preferences are aligned with the strategy, as buyers are willing to pay a 10 percent premium for advanced features compared to mileage features. Additionally, the company stands to benefit from lower GST rates on ICE vehicles, despite analysts noting a slowdown in urban discretionary spending after three fiscal years leading up to FY24.
Financial performance:-
The company’s revenue surged 10 percent, increasing from Rs 34,436 crore in Q2FY24 to Rs 37,924 crore in Q2FY25. However, net profit increased by 35 percent from Rs 2,484 crore to Rs 3,361 crore in the same period.
Revenue segmentation:-
In Q2FY25, Mahindra & Mahindra’s revenue consists of Automotive which contributes around 55.84 percent, and Farm Equipment contributes around 21 percent. In the services segment, financial services contribute around 11.3 percent of the revenue, and the remaining 11.86 percent are from Industrial business and consumer services.
Most of the company’s profit is earned through Automotive which contributes around half of the bottom line, Farm equipment contributes around 28 percent, financial services around 12.6 percent, and the remaining 9.2 percent from Industrial business as of Q2FY25. However, despite the automotive contribution to profits being higher, farm equipment has a better profit margin among others.
Recent October 2024 Sales:-
The company sold around 96,648 vehicles in October 2024 month combining all the segments. In the Utility segment, M&M sold around 55,571 vehicles in domestic and export sales. Commercial domestic sales were 28,812 units.
Company profile:-
Mahindra & Mahindra Limited which was founded in 1945 and headquartered in Mumbai, is an Indian multinational conglomerate with a portfolio including automotive, farm equipment, financial services, and technology.
The company is known as the world’s largest tractor manufacturer and India’s top SUV producer. Their business model focuses on innovation, and customer-centric solutions, leveraging R&D, and holds a global presence in over 100 countries.
Mahindra aims to drive positive change through its products and services while improving agricultural productivity and providing reliable transportation solutions across urban and rural landscapes.
Written by Santhosh S
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