M&M‘s share price surged over 7% in early trading on Friday, following analysts’ bullish outlook and raised target prices after the company’s strong Q4 results. The shares soared as much as 7.66%, reaching a record high of Rs 2,554.75 per share on the BSE.
Auto major Mahindra and Mahindra reported a net profit of Rs 2,038 crore for the fourth quarter ended March 2024, marking a 32% year-on-year (YoY) increase from Rs 1,549 crore in the same quarter last year. Revenue from operations rose 11% YoY to Rs 25,109 crore, up from Rs 22,571 crore in the corresponding period last year.
EBITDA for the March quarter jumped 22% YoY to Rs 3,446 crore, compared to Rs 2,831 crore in the same quarter last year. In the auto segment, fourth-quarter volumes increased to 21.5 lakh, with utility vehicle volumes reaching a record high of 1.26 lakh. The company currently has open bookings for 2.2 lakh SUVs.
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In the fourth quarter, the tractor market share declined to 39.4%, down by 130 basis points. Meanwhile, farm machinery revenue for the March quarter increased by 44% year-on-year to Rs 225 crore.
Brokerages on Mahindra & Mahindra
Jefferies on Mahindra & Mahindra
Jefferies has upgraded Mahindra & Mahindra from a hold to a buy, significantly increasing the target price to Rs 2,910 from Rs 1,615.
According to Jefferies, the tractor segment is currently in a late downturn phase, but the company is bolstering its market position by expanding its SUV portfolio and increasing production capacity.
The brokerage firm has revised its earnings per share (EPS) estimates for FY25-26 upward by 16-21%, reflecting a positive outlook on the company’s future performance. Despite these favorable projections.
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Jefferies highlights that Mahindra & Mahindra’s valuation remains 20% below the blended peer average, suggesting room for further growth and investment potential.
Motilal Oswal on Mahindra & Mahindra
According to a report from Motilal Oswal, the firm has raised its EPS estimates for Mahindra & Mahindra by 6% for FY25 and 11% for FY26. They project the company to achieve a compound annual growth rate (CAGR) of approximately 17% in revenue, 20% in EBITDA, and 16% in PAT over FY24-26.
Despite outpacing its own earnings growth targets and attaining an 18% return on equity (RoE) in FY24, Mahindra & Mahindra continues to aim for an 18% RoE in the long term. This goal is supported by a significant increase in capex guidance to Rs 370 billion for FY25-27, up from Rs 195 billion during FY22-24.
The implied core price-to-earnings (P/E) ratio for Mahindra & Mahindra is projected at 24x for FY25E and 19x for FY26E EPS, which remains attractive compared to peers. Consequently, Motilal Oswal maintains a BUY rating on the stock with a revised target price of Rs 2,720, based on FY26E sum-of-the-parts (SOTP) valuation.
(Disclaimer: Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)
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