M&M up 3% in subdued market, nears record high; what's driving auto stock?

M&M today said it sold its entire stake in RBL Bank for a consideration of Rs 678 crore representing a 62.5 per cent gain on the investment.

Share price of Mahindra & Mahindra (M&M) today

 

Shares of Mahindra & Mahindra (M&M) rallied 3 per cent to ₹3,674.90 on the BSE in Thursday’s intra-day trade after the company reported healthy earnings for the second quarter of the financial year 2025-26 (Q2FY26). Additionally, M&M has sold its entire stake in RBL Bank.

 

At 12:38 PM; M&M share price was quoting 1.5 per cent higher at ₹3,634, as compared to 0.05 per cent rise in the BSE Sensex. The stock price of the automobile company had hit a record high of ₹3,723 on September 9, 2025.

 

In the past six months, M&M has outperformed the market by surging 18 per cent, as against 3.6 per cent rise in the BSE Sensex and a 17 per cent rally in the BSE Auto index.

What’s driving M&M stock price?

 

M&M informed the stock exchanges that the company has sold its entire stake in RBL Bank for a consideration of ₹678 crore representing a 62.5 per cent gain on the investment. In July 2023, M&M had acquired 3.45 per cent stake in RBL bank for ₹417 crore.

 

M&M delivered a resilient Q2FY26 performance despite temporary GST transition headwinds, underscoring the strength of its diversified portfolio. M&M leads the SUV segment with a revenue market share of 25.7 per cent in Q2FY26 (up 390 bps YoY). M&M also retains its market leadership in tractor space with market share as of Q2FY26 at 43 per cent (up 50 bps YoY). 

 

Automotive segment EBIT margins improved ~20 bps QoQ at 9.1 per cent which includes eSUV contract manufacturing margins (core Auto EBIT at 10.3 per cent, up 30 bps QoQ), while Farm Equipment segment margins were steady at 19.7 per cent (core tractor margins at 20.6 per cent).

 

Management’s optimistic stance on GST reforms highlights a medium term structural tailwind that could unlock fresh demand across rural and commercial segments. With improving product mix, disciplined capital allocation, and a strong launch pipeline, M&M remains well-positioned to sustain double-digit earnings growth in FY26E, according to ICICI Securities.

 

Analysts at Choice Institutional Equities believe the quarter's results demonstrate that M&M’s revenue outperformance is strategically driven by segment mix and pricing power, rather than mere volume expansion. This allows the company to successfully convert its strong topline growth into margin expansion. The brokerage firm has increased its FY26/27E EPS estimate by ~2.0/2.0 per cent, factoring in strong growth in Q2FY26. Hence, analysts maintain target price at ₹4,450, valuing the company at 25x (unchanged) the average of FY27/28E EPS, along with subsidiary valuation. The brokerage firm said it reiterated ‘BUY’ rating on the stock, supported by M&M’s strategic focus on premium product portfolio expansion and anticipated recovery in rural demand.  ALSO READ | SBI to sell 6.3% stake in SBI MF via IPO, retain majority shareholding 

Analysts at JM Financial Institutional Securities upgraded its rating to ADD from HOLD on M&M, with a target price of ₹3,842 (SOTP valuation, 25x core business).

 

The brokerage firm revised its domestic tractor volume growth estimate to ~19 per cent for FY26 (up from 10 per cent), driven by GST rationalisation, favourable farm sentiment, healthy reservoir levels, improved liquidity, and new product launches. In the auto segment, GST rationalisation, preponement of launch cycle, and the continued ramp-up of EV volumes are expected to support growth (management guided for mid to high teen UV growth for M&M). 

 

On the margin front, farm segment profitability should benefit from operating leverage, while strong SUV volumes, expanding EV sales, and PLI incentives are likely to enhance margins in the auto segment, the brokerage firm said in the Q2 result update.