M&M Q1 Results Review - Margin Beat Across Segments: ICICI Securities

ICICI Securities Report

Mahindra and Mahindra Ltd.'s Ebitda margin, at 14.9% (up ~200 basis points QoQ), was 110 bps higher than consensus. Auto/farm equipment segment's Ebit margin was up 70 bps/270 bps QoQ at 9.5%/18.5%.

M&M is planning SUV capacity expansion to 64,000 units/month by end-FY25, from 49,000 units (as of FY24-end). The company also has an order backlog of ~178,000 units as of end-Q1.

We believe, with the recently launched XUV3XO, monthly utility vehicle production levels should move over 45,000 units/month soon.

Maintain Buy with an SoTP-based revised target price of Rs 3,349 (earlier Rs 3,365), implying 28 times FY26E core EPS.

Downside risks

• Rising competitive intensity in UV space.

• Slowdown in domestic UV market post robust growth across FY22-24.

• Sharper-than-expected decline in tractor market in FY25 post general elections.

• Increase in EV launches FY25 onwards may put pressure on profitability in auto segment.

• Re-emergence of capital allocation in non-core areas.

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