M&M share price jumps over 5% to record high on supply deal with Volkswagen

Mahindra & Mahindra (M&M) share price rallied over 5% to a 52-week high after the company signed a supply agreement for Volkswagen components to be used in its electric vehicles. M&M shares jumped as much as 5.61% to ₹1864.65 apiece on the BSE.

The agreement between Volkswagen Group and M&M is for the supply of components of Volkswagen’s MEB for Mahindra’s purpose-built electric platform INGLO. 

The deal covers the supply of certain electric components as well as unified cells. The two companies started a partnering agreement and signed a term sheet in 2022. 

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Mahindra will be the first external partner to use the unified cell concept, the core element of Volkswagen’s battery strategy. The supply agreement will run over several years and will have a total volume of about 50 GWh over lifetime, M&M said in a release.

The two companies were evaluating further opportunities for collaboration, the statement added.

Mahindra plans to launch five all-electric SUVs in India based on its new, purpose-built electric platform INGLO, starting December 2024. 

The German carmaker Volkswagen has developed a modular, open vehicle platform for EVs, called MEB, which is used to build its cars and those of other group companies including Skoda and Audi. This also allows Volkswagen to be a supplier of electric technology and parts to other automakers.

The partnership with Mahindra is led by Volkswagen Group Technology and its “Platform Business” unit in close cooperation with Škoda Auto Volkswagen India Pvt. Ltd, the company said.

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M&M share price has risen over 17% in the past three months. On Thursday, M&M shares rallied 6.5% after it reported Q3 results.

The Indian automobile major M&M on Wednesday reported a standalone net profit of ₹2,454 crore for the quarter ended December 2023, registering a growth of 61% from ₹1,528 crore in the same quarter last year, aided by robust performance of the automotive segment.

The company’s revenue in Q3FY24 increased 17% to ₹25,289 crore from ₹21,653 crore, YoY.

“Our businesses have delivered a solid operating performance this quarter. Auto continues to gain market share and grew rapidly to double its profit. Farm has gained market share despite tough market conditions,” said Anish Shah, MD & CEO, M&M.

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M&M’s revenue market share for the SUV segment increased by 40 basis points (bps) to 21% during Q3FY24 from 19.1% in Q3FY23.

Gradual addition to SUV capacity by Q4FY24, high outstanding bookings and healthy new bookings’ rate are likely to drive M&M’s sales growth. Higher operating leverage and benign commodity costs are expected to support the margin performance going ahead, JM Financial Services said. 

Driven by strong demand tailwind in autos, the brokerage maintained its ‘Buy’ rating on M&M with a March 2025 target price of ₹1,850 per share.

At 12:00 pm, M&M shares were trading 4.23% higher at ₹1,840.25 apiece on the BSE.

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