MAHINDRA POSTS BEST QUARTERLY RESULTS

M&M’s shares surged over 5 percent on May 17 to a record high of ₹2,501, following brokerage upgrades and target price hikes driven by strong Q4 results. The bullish sentiment around M&M stock is fueled by a promising growth outlook in the auto segment and potential recovery in the farm equipment business for FY25.

M&M reported a 32 percent year-on-year jump in net profit to ₹2,038 crore, driven by strong auto performance, a favorable product mix, and operating leverage benefits. The automaker’s standalone revenue from operations rose 11 percent year-on-year to ₹25,109 crore.

Jefferies upgraded M&M stock from ‘hold’ to ‘buy’ and raised the target price to ₹2,910 from ₹1,616, suggesting a 23 percent upside potential from the current price. The brokerage notes that valuations remain 20 percent lower than the peer average, due to the rapidly expanding utility vehicle portfolio and capacity.

Morgan Stanley maintained its ‘overweight’ rating on M&M, projecting that the Thar-maker will continue to be the fastest-growing passenger vehicle manufacturer in FY25. They also foresee an improvement in the company’s farm business, which has faced challenges in recent quarters. Management indicated that the farm segment could recover in the second half of FY25, driven by an ‘above normal’ monsoon, expected farm output recovery, and robust agricultural export growth, alongside government infrastructural support and credit availability.

Nuvama Institutional Equities retained its ‘buy’ rating on M&M and raised the price target to ₹2,760. They expect M&M to achieve a 14 percent revenue CAGR over FY24–26E, driven by 15 percent growth in the auto segment and 9 percent in the farm segment, supported by favorable monsoons and government policies.

Emkay, also recommending a ‘buy’, noted a promising demand outlook for both M&M’s key segments. They expect strong growth in SUVs due to new launches and a potential rebound in tractor sales after a consolidation period. Emkay upgraded its earnings estimates for FY25 and FY26 by 8 percent each, reflecting sustained market share gains in SUVs and an improved outlook for tractors.

In contrast, CLSA downgraded the stock to ‘sell’ from ‘outperform’, citing that it is fairly priced following the recent rally. M&M shares have surged nearly 30 percent in the past three months.

On May 16, M&M announced a ₹12,000 crore investment in its electric vehicle (EV) unit, Mahindra Electric Automobile, from FY25-27.