M&M Shares Hit Record High On Target Price Hikes After March Results

Shares of Mahindra & Mahindra Ltd. continued their record rally for the fourth consecutive session on Friday after its fourth-quarter profit met analysts' expectations. Its outlook for volume growth, product launches and capacity expansion also led to brokerages to raise target price on the stock.

Shares of the company have risen over 15% in the last seven sessions.

• Revenue up 12.5% to Rs 25,436 crore (Bloomberg estimate: Rs 24,029 crore).

• Ebitda up 21.7% to Rs 3,446 crore (Bloomberg estimate: Rs 3,057 crore).

• Ebitda margin expands 100 basis points to 13.5% (Bloomberg estimate: 12.7%).

• Net profit up 31.6% to Rs 2,038 crore (Bloomberg estimate: Rs 1,815 crore).

• Dividend of Rs 21.10 per share declared.

Record SUV sales more than offset the cyclical pain in the tractor business, boosting the company's bottom line by nearly 50% in fiscal 2024.

“It has been an excellent year with most of our businesses delivering a high level of performance—auto continued its high-growth trajectory, and the farm business gained market share in a tough market,” Anish Shah, chief executive officer at Mahindra Group, said at a post-earnings media interaction.

“The company is now looking at mid-to-high-teens growth in this fiscal, which will help it grow sales beyond half a million units.”

Citi Research has raised its target price on the stock to Rs 2,730 from Rs 1,890 earlier. "We increase our target price-to-earnings for the core business to 26 times to reflect the healthy volume growth outlook, supported by a robust model launch pipeline and commensurate capacity expansion," it said.

Nuvama also raised its target price to Rs 2,760 from Rs 2,380 earlier.

"Revenue visibility in the auto segment is robust, supported by a large UV order book of 220,000 units and a healthy launch pipeline in fiscal 2025—with Thar five-door and dedicated platform EVs," it said.

The brokerage also expects a recovery in the farm segment due to abundant monsoons, favourable government policies and benign terms of trade for farmers. "Factoring in higher volume/margins, we are raising earnings per share estimate for fiscal 2025 and 2026 by 8% and 13%, respectively."

However, CLSA downgraded Mahindra's rating to 'sell' from 'outperform', due to the recent rally in the stock price. The brokerage firm said that the stock is fairly priced even after the recent rally.

Shares of the company rose as much as 7.69% before paring gains to trade 6.91% lower at 9:51 a.m., compared to a 0.2% decline in the NSE Nifty 50.

The stock has risen 46.64% year-to-date and 91.76% in the last 12 months. Total traded volume so far in the day stood at 1.23 times its 30-day average. The relative strength index was at 82.93, indicating that the stock may be overbought.

Of the 41 analysts tracking the company, 36 maintain a 'buy' rating, four recommend a 'hold,' and one suggests a 'sell', according to Bloomberg data. The average 12-month analysts' price target implies a downside of 0.8%.