Brokerages bullish on M&M on SUV growth, product pipeline; flag margin risk

M&M Q4 results analysis: Brokerages stay bullish on M&M amid strong SUV growth and earnings outlook. They see up to 43 per cent upside in M&M share price despite margin pressure, tractor sales' risks

A strong demand environment for sports utility vehicles (SUVs), a robust product pipeline, and improving growth visibility across segments have kept analysts largely bullish on Mahindra & Mahindra (M&M) after the automaker reported its March quarter (Q4FY26) results on Tuesday. 

Near-term margin pressures from rising commodity costs and potential weakness in the tractor cycle due to an erratic monsoon (El Niño risks) remain concerns. However, analysts believe M&M is well positioned to deliver steady earnings growth over the medium term.

 

This outlook is supported by capacity expansion and a steady stream of launches across internal combustion engine (ICE) and electric vehicle (EV) portfolios. 

 

“We maintain M&M as our top original equipment manufacturer (OEM) pick given its strong medium-term growth potential. A robust launch cycle across ICE and EV segments should help it capitalise on rising EV demand and drive market share gains,” analysts at Nomura said, reiterating a ‘buy’ rating. 

M&M shares rose 2.75 per cent on the BSE on Wednesday, and climbed 6.25 per cent in two days.

 

By comparison, the BSE Sensex settled 1.2 per cent higher on Tuesday. 

 

Solid finish to FY26

 

M&M delivered strong operational performance in Q4FY26, with revenue rising about 26 per cent year-on-year (Y-o-Y) to ₹39,600 crore, driven by healthy volume growth and improved realisations. On a sequential basis, revenue was up 2.7 per cent.

Standalone adjusted profit after tax (PAT) surged 53 per cent Y-o-Y to ₹3,737 crore, although it declined 7.3 per cent quarter-on-quarter (Q-o-Q). Earnings were supported by operating leverage and higher other income. 

Earnings before interest, taxes, depreciation and amortisation (Ebitda) grew 36.6 per cent Y-o-Y to ₹5,509 crore, but margins remained largely flat sequentially at 13.9 per cent as higher raw material costs offset efficiency gains.

 

Segment-wise, the auto business posted a 25 per cent Y-o-Y rise in revenue to ₹31,100 crore, while the farm segment grew 32 per cent to ₹8,480 crore. Other income increased sharply to ₹590 crore.

  Analysts noted that the quarter saw a broad-based beat, supported by strong volumes and pricing power.

  For the full year, M&M reported a 25 per cent Y-o-Y increase in revenue to ₹1.45 trillion, a 23 per cent rise in Ebitda to ₹20,900 crore, and a 33 per cent jump in PAT to ₹15,700 crore.

 

Outlook remains constructive

  Brokerages expect M&M’s growth momentum to continue in FY27, supported by management guidance and favourable demand trends.

  The company has guided for a 15–20 per cent earnings per share (EPS) compound annual growth rate (CAGR) over the next five years, while maintaining return on equity (RoE) at around 18 per cent.

Its SUV segment is expected to grow in the mid-to-high teens in FY27, aided by sustained demand and capacity ramp-up.

 

Nomura estimates SUV volumes to grow 14 per cent annually over FY27 and FY28, reaching 753,000 units and 860,000 units, respectively.

  However, the brokerage has trimmed its margin estimates by 100–110 basis points (bps) over the next two years due to rising commodity costs. It has marginally lowered its target price to ₹4,580 from ₹4,662.

  M&M has also expanded product pipeline, adding six ICE SUV launches and three battery electric vehicle (BEV) launches to its earlier plans through 2031.

 

The company now intends to introduce 10 ICE SUV products between April 2026 and 2031, including nine new models.

Motilal Oswal Financial Services has raised its earnings estimates for M&M by 3–4 per cent for FY27 and FY28, citing strong visibility.

 

It expects revenue, Ebitda, and PAT to grow at a CAGR of around 15 per cent, 12 per cent, and 13 per cent, respectively, over FY26–28. It has reiterated a ‘buy’ rating with a target price of ₹3,963.

 

Emkay Global Financial Services has maintained an ‘add’ rating with a target price of ₹3,800, noting steady growth prospects despite near-term risks.

 

It expects SUV volume growth of 15–18 per cent in FY27, supported by strong demand and operational improvements.

 

However, Emkay cautioned that tractor demand remains contingent on monsoon outcomes, with risks skewed towards the second half of FY27 if rainfall is below normal.