Mahindra And Mahindra - In A Sweet Spot, Upgrade To 'Buy': Yes Securities

Yes Securities Report

Key verticals of Mahindra and Mahindra Ltd. - tractors and sports utility vehicles seem all set to fire in sync. Our checks across key regions reveal vastly improved agri sentiments led by multiple factors (favorable monsoon, better cash crop realisation, and improved sowing YoY), which should collectively boost tractor volumes.

We expect M&M to maintain large part of recent market share gains, led by new launches in lightweight segment (OJA and Swaraj). Within passenger vehicles, successful launches of Thar Roxx and XUV 3XO should drive industry outperformance; the consequent Thar portfolio contribution uptick (~18.4% by FY26E versus 12.5% in FY H1 FY25E) should enhance model mix and likely margins.

We stay watchful of the CAFÉ norm impact even though M&M’s EV strategy is in place. We build in a SUV volume CAGR of ~15.4% over FY24-27E with overall revenue/Ebitda/adjusted profit after tax compound annual growth rate of 13.4%/17.5%/13.3% and upgrade the stock to Buy with a Mar’27 SOTP-based target price set at 3,707 (versus the prior Rs 3,347).

M&M trades at implied core PE of 23.2 times/21 times FY26E/FY27E EPS, making it an attractive bet.

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