Motilal Oswal has maintained its ‘Buy’ rating for Mahindra & Mahindra after the auto major launched XUV7XO and the XEV9S. The brokerage maintained its target price at Rs 4,521, which implied nearly 21% upside potential over the coming 12 months.
Strong launch pipeline and UV volume growth
The company has a healthy pipeline of new products, including the recently launched XUV7XO and XEV 9S, as well as plans to launch two more ICE variants and another EV in FY27. This momentum is expected to help M&M deliver a 14% volume CAGR in Utility Vehicles (UVs) over FY25-28.
Positive momentum in tractor industry
Farm sentiments have turned positive due to good kharif sowing, healthy reservoir levels, and favourable trade terms for farmers. The management has raised its industry growth guidance to low double digits for FY26, and Motilal Oswal factors in a 10% volume growth annually for M&M’s tractor segment over the FY25-FY28 on a compounded basis.
Dominant market position in LCVs
M&M continues to lead the below-3.5T Light Commercial Vehicle (LCV) category, where it improved its market share to 51.9% in FY25. A demand revival in the pick-up segment, supported by recent GST rate cuts, is expected to drive an 11% volume CAGR in this segment through FY28.
Robust financial growth projections
Motilal Oswal estimates that the company is likely to post strong financial performance over the next few years, with a projected revenue growth of 19% annually on a compounded basis between FY25-FY28. The compounded profit growth is seen around the same period, FY25-FY28. These projections are supported by multiple long-term growth drivers across the company’s core businesses.
Value unlocking in “Growth Gems”
M&M has identified nine businesses as “growth gems” with an ambitious target of achieving 5x growth in each over the next 5-7 years. Motilal Oswal notes that any incremental value unlocked from these segments provides significant “option value” and potential additional returns for shareholders.
All in all, over the past few days, M&M has launched three models: XUV7XO – a material refresh of the XUV700 with a marginal cost increase, XE9S (EV variant), and the EV variant of XUV 3XO. Beyond these models, the company plans to launch two more ICE variants in FY27, alongside an EV in the same fiscal. This healthy launch pipeline is expected to help sustain healthy demand momentum going forward.
M&M stock performance
The share price of Mahindra & Mahindra has fallen 2.3% in the last five trading sessions. The stock has remained little to no change in the past one month. It has given a return of more than 19% in the last six months. Mahindra & Mahindra’s stock price has risen almost 23% over the last one year.
M&M Q2 FY26 result
Mahindra & Mahindra reported a consolidated profit after tax of Rs 3,673 crore in the second quarter of the current financial year, rising 28% year-on-year (YoY). The automobile company’s consolidated revenue from operations rose 22% YoY to Rs 46,106 crore.