M&M hits new high on strong Feb auto sales; soars 20% in 1 month

The company reported a healthy 24 per cent YoY growth in total auto sales at 72,923 vehicles for the month of February 2024.

Shares of Mahindra & Mahindra (M&M) hit a new high of Rs 1,974.60, up 2 per cent on the BSE in Friday's intra-day trade after the company reporting a healthy 24 per cent growth in total auto sales at 72,923 vehicles for the month of February 2024. The company had sold 58,801 vehicles in the same month last year.

However, total tractor sales declined 16 per cent to 21,672 units in last month, against 25,791 units sold in February 2023. In the export market, the company sold 1551 tractors, a growth of 32 per cent over last year.

The management said Southern and Western states continue to face agri stress due to erratic and deficient monsoon. However, Rabi crop outlook is very good, with wheat crop likely to be a bumper crop.

Harvesting has started in a few states with the government supporting early procurement of wheat crops. Continued government support through various rural schemes and enhanced institutional credit will further help boost tractor demand going forward, the management said.

In the past one month, M&M has outperformed the market by surging 20 per cent, as compared to 2 per cent rise in the S&P BSE Sensex.

Analyst at ICICI Securities have a positive view on M&M and retain BUY rating on the stock amidst its convincing market leadership in the SUV & Tractor space, tangible product outlook in the Electric PV domain and persistent focus on capital efficiency.

Going forward on a high base of ~9.5 lakh units in FY23, domestic tractor sales are seen consolidating at these levels with volumes expected to de-grow by 5 per cent in FY24E and thereafter resume its 5-7 per cent long term volume CAGR trend. M&M's focus in present times in on market share gains with 80 bps gain already witnessed in Q3FY24 at 41.8 per cent and endeavour to further improve upon the same going forward, the brokerage firm had said in December quarter result update.

M&M is the prominent market player in the domestic PV space predominately in the SUV category with its recent launches like XUV 700, Thar & Scorpio-N being an instant hit with customers primarily driven by the cutting-edge technology & value proposition offered at the right price point.

With midcycle refresh of XUV400, it aspires to grow volumes in SUV space at mid to high teens in FY25E amidst domestic PV industry growth pegged at <5 per cent. Analyst at the brokerage firm expects double digit volume growth to continue in FY26E as well. This will ensure market share gains for M&M and is structurally positive (10MFY24 market share already up ~180 bps to 11 per cent), it added.