M&M zooms 91% in 5 months on healthy outlook; m-cap nears Rs 4 trillion

M&M stock record high price: With strong focus on capital efficiency, impressive product launch slate and capacity expansion in the offering, M&M is well positioned for profitable growth going forward

M&M hits record high: Mahindra & Mahindra (M&M) share price hit a new high of Rs 3,013.95, gaining 3 per cent on the BSE in Tuesday's intraday trade, on healthy business outlook.

In the past two months, the stock of the automobiles company has risen by 49 per cent. Besides, in the past five months, the stock price of M&M has zoomed 91 per cent from a level of Rs 1,580 hit on January 18, 2024. A sharp rally in the stock price has seen the market capitalisation (market-cap) of M&M inch towards Rs 4 trillion. The company's market-cap hit Rs 3.75 trillion in the intraday trade today.

Mahindra and Mahindra conducted Analysts' Day, last Friday, and highlighted its growth prospect and future business strategy. The event highlighted the company’s capabilities across various business including autos, tractors, e-rickshaw, technology, real estate and finance.

It aims to maintain its revenue market leadership position in the SUV segment by aggressive product launches and is banking on XUV 3XO to gain volume market share, especially in the compact SUV space.

In the SUV business, the company plans to launch 16 new models by FY30 across ICE and Electric Vehicle (EV) powertrains. Investments in the Auto business are expected to be Rs 27,000 crore between FY25-27, largely towards developing new products and capacity expansion.

In the Farm Equipment business, M&M said the industry is expected to grow by single digit during FY25 on the expectation of above-normal monsoon. Given this, the company 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, analysts at JM Financial Institutional Securities said they have upgraded their target multiple to 24x (20x earlier) for the core business. The brokerage firm maintains a 'Buy' rating on M&M with a target price of Rs 3,125.

"With strong focus on capital efficiency (RoE at ~20 per cent in FY24), impressive product launch slate, and capacity expansion in the offering, the company is well positioned for profitable growth going forward," ICICI Securities said while maintaining a positive view on the stock.

Over the past 3-4 years, M&M has not only demonstrated strong performance improvement in its key segments but has also prioritised prudent capital allocation practices. Motilal Oswal Financial Services said. It expects M&M to continue to focus on prudent capital allocation going forward as well.

“We now value the tractor/auto businesses at 22x/20x Jun’26E EPS (from 20x/18x earlier). Its re-rating drivers include strong demand momentum in UVs, healthy long term growth opportunity in tractors, solid progress within growth gems which would emerge as future value unlocking drivers, continued prudent capital allocation with a clear focus on returns,” the brokerage firm said. It reiterated its 'Buy' rating with a revised target price of Rs 3,310.