In September 2024, India’s passenger vehicle sales experienced a 3.4 percent decline, totaling 363,078 units. Passenger cars saw a significant drop of 17.1 percent, with sales decreasing to 125,409 units. However, utility vehicles (UVs) grew by 6.7 percent, with 225,942 units sold, indicating a rising preference for larger vehicles and SUVs.
Price movement
With a market capitalization of Rs 3.52 lakh crore, the shares of Mahindra & Mahindra were trading at Rs 2,835.00 per share, increasing around 0.15 percent as compared to the previous closing price of Rs 2,830.35 apiece.
Brokerage Recommendations
Nomura, one of the well-known brokerages globally, gave a ‘Buy’ call on the automobile stock with a target price of Rs 3,681 apiece, indicating a potential upside of 30 percent from Tuesday’s price of Rs 2,835 per share.
Brokerage Rational
Mahindra & Mahindra’s newly launched electric SUVs garnered an impressive 30,179 bookings on their first day, with a total booking value of Rs 8,472 crore. The XEV 9e and BE 6 models account for 56% and 44% of bookings, respectively, priced between Rs 18.9 lakh and Rs 30.5 lakh.
The overwhelming demand highlights customer confidence in Mahindra’s Unlimited India vision, offering high-performance electric SUVs. These models are designed to combine luxury, performance, and cutting-edge technology, positioning Mahindra as a leader in the electric vehicle market and showcasing its commitment to innovation in India’s automotive sector.
Nomura Holdings highlighted that the strong number of bookings for Mahindra’s BEVs marks a promising start, with 73% of orders for the high-end 79 kWh Pack Three. Despite the premium pricing, this reflects growing demand in India’s nascent electric vehicle market.
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Key drivers
Key drivers of revenue growth for the company include a 16 percent rise in the auto and farm sectors, a 1.9x increase for Tech Mahindra, a 47 percent growth for Mahindra Finance, and a 33 percent growth in its growth gems segment.
Market Dynamics
The LCV market share increased to 51.9 percent, up 230 basis points. Farm Machinery revenue grew by 12 percent, though slower than expected due to macroeconomic challenges. However, the farm sector is expected to see positive growth, driven by improved reservoir levels and favorable MSP dynamics.
Electric Vehicle (EV) Strategy
The company’s EV strategy focuses on launching electric SUVs as aspirational lifestyle products, with an initial target of 5,000 units per month for new models. Bookings opened on February 14, and promotional content has garnered over 1.4 billion views, showcasing strong customer interest.
Future outlook
Management is optimistic about continued demand, driven by tax savings and interest rate cuts benefiting middle-class consumers, fostering a favorable market environment. The outlook remains positive for the tractor and auto segments, with growth expected to extend into the next fiscal year.
Company Snapshot
Mahindra & Mahindra Ltd is a highly diversified Indian automaker, with a presence in 2-wheelers, 3-wheelers, PVs, CVs, tractors, and earthmovers. Its subsidiaries span financial services, IT, retail, infrastructure, aerospace, defense, energy, and more.
Written by Abhishek Singh
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