M&M share price hits record high as brokerages raise target price on growth strategy

  • Mahindra & Mahindra (M&M), in its Investor Day presentation, announced its plans to launch a total of 23 new vehicles by 2030, including new SUVs. M&M's SUV market share has risen from 15% in FY21 to 18% in FY24.

Ankit Gohel
First Published18 Jun 2024, 09:48 AM IST
M&M shares have gained over 19% in one month and more than 75% year-to-date (YTD). M&M share price has given multibagger returns of over 110% in one year.
M&M shares have gained over 19% in one month and more than 75% year-to-date (YTD). M&M share price has given multibagger returns of over 110% in one year.

M&M share price gained over 2% to hit a record high on Tuesday after analysts maintained their bullish view on the stock. M&M shares rallied as much as 2.71% to 3,006.45 apiece on the BSE.

Auto major Mahindra & Mahindra (M&M), in its Investor Day presentation, announced its plans to launch a total of 23 new vehicles by 2030, including new SUVs. M&M's SUV market share has risen from 15% in FY21 to 18% in FY24.

The company also plans to introduce seven Born Electric Vehicles (BEV) by the end of the decade. It showcased three feature-rich BEV - E8, E9, BE.5 - which have high range, showing the focus on performance and aspirational value.

Also Read: M&M outshines Tata Motors to become India's second-largest auto major; shares hit fresh 52-week high

Brokerage firm Jefferies found these three new electric SUVs well-designed and believes they can provide a compelling proposition for customers.

Jefferies sees M&M's auto volumes rising at 14% CAGR over FY24-27E, led by 18% CAGR for SUVs. It also assumes M&M’s tractor volumes remain flat YoY in FY25E, followed by 12% CAGR in FY26-27E.

Jefferies upgraded FY25-27E EPS estimates by 2% factoring in slightly higher tractor volumes, and expects 12% volume and 18% EPS CAGR over FY24-27E.

The foreign brokerage has a ‘Buy’ rating on M&M shares and raised the target price to a whopping 3,510 per share from 2,910 earlier.

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M&M also said it intends to rollout a total capex of 27,000 crore between FY25-27.

According to Chirag Jain, Senior Research Analyst at Emkay Global Financial Services, M&M’s upcoming launch pipeline remains strong with an unchanged focus on lifestyle and aspirational products (9 ICE, 7 BEVs, 7 LCVs to be launched till 2030), even as the company highlighted strong long-term growth potential for domestic tractors – with exports and farm mechanization providing additional growth avenues.

Emkay Global raised FY25E and FY26E EPS estimates by ~1% and 3%. It retained an ‘Add’ rating and raised M&M share price target to 3,000 per share from 2,550 earlier.

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Factoring in higher volume and realisation, Nuvama Institutional Equities also raised FY25E and FY26E EPS estimates by 2% and 6%. The brokerage firm retained a ‘Buy’ call on the stock and increased M&M share price target to 3,500 apiece from 2,760 earlier.

M&M is focused on driving strong double-digit growth in the Farm Machinery segment through product and network expansion.

“Considering the strong demand tailwind in autos (led by recent launches), expected recovery in farm segment, preparedness for EV transition and consistent execution on improving ROEs/FCFs, we have upgraded our target multiple to 24x (20x earlier) for the core business,” JM Financial said.

The brokerage house maintained a ‘Buy’ rating on M&M shares and raised SoTP based March 2025 target price to 3,125 per share from 2,575 earlier.

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Over the past 3-4 years, M&M has not only demonstrated strong performance improvement in its key segments but has also prioritized prudent capital allocation practices.

Motilal Oswal expects M&M to continue to focus on prudent capital allocation going forward as well. It raised FY25E and FY26E earnings estimates by 7% each to factor in the healthy response to its new model launches in the automotive segment and initial signs of tractor demand revival for FY25.

The brokerage estimates M&M to clock a revenue, EBITDA and PAT CAGR of ~18%, 20% and 20% over FY24-26.

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“We now value the tractor/auto businesses at 22x/20x Jun’26E EPS (from 20x/18x earlier). Its re-rating drivers include: 1) strong demand momentum in UVs 2) healthy long term growth opportunity in tractors 3) solid progress within growth gems which would emerge as future value unlocking drivers 4) continued prudent capital allocation with a clear focus on returns,” Motilal Oswal said.

It reiterated a ‘Buy’ call on the stock with BUY with a revised target price of 3,310 per share.

M&M shares have gained over 19% in one month and more than 75% year-to-date (YTD). M&M share price has given multibagger returns of over 110% in one year.

At 9:45 am, M&M shares were trading 2.47% higher at 2,999.25 apiece on the BSE.

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$24 M

$13.8 B

₹313 Cr

₹773.44 Cr

34.7 M sqft

250,000

$4.5 B

First Published:18 Jun 2024, 09:48 AM IST
HomeMarketsStock MarketsM&M share price hits record high as brokerages raise target price on growth strategy

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