Mahindra & Mahindra soars on broker's outperform rating

Mahindra & Mahindra (M&M) surged 4.80% to Rs 2983.75 after a foreign broker reiterated its "outperform" rating and maintained a target price of Rs 3,440.

The broker's bullish stance is underpinned by its engagement with M&M's management, who expressed strong confidence in the company's growth trajectory driven by an ambitious pipeline of new model launches. Analysts anticipate these launches to fuel growth in FY25-26.

M&M has strategically shifted its domestic passenger vehicle (PV) portfolio, increasing the SUV mix from 35% to 55% over the past five years. The company is now focusing on mid and premium SUV segments, aligning with the evolving consumer preferences towards feature-rich vehicles, even at a premium.

While EVs are expected to witness significant growth in the domestic market, analysts noted a potential slowdown in urban discretionary spending following three robust fiscal years up to FY24. However, M&M's strong product pipeline and strategic focus position it well to capitalize on the growing demand for SUVs and EVs.

In addition to its robust passenger vehicle business, M&M's strong tractor segment and improving automotive franchise continue to attract investor interest. A recent broker's note highlighted the potential for significant growth in the tractor industry, projecting a 13% volume CAGR and a 19% EPS CAGR for M&M over FY24-27E.

M&M Group enjoys a leadership position in farm equipment, utility vehicles, information technology and financial services in India. It is the world's largest tractor company by volume. It has a strong presence in renewable energy, agriculture, logistics, hospitality and real estate.

On consolidated basis, the company's net profit jumped 35.05% to Rs 3,170.72 crore on 10.13% rise in income from operations to Rs 37,923.74 crore in Q2 FY25 as compared with Q2 FY24. The companys revenue from automotive segment was at Rs 21,755.21 crore (up 15.29% YoY) while revenue Farm Equipment sector (FES) stood at Rs 8,194.30 crore (down 2.14% YoY).

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