Mahindra & Mahindra (M&M) share price are gaining traction after a sharp decline in the past few days. The stock is currently trading at Rs 2,710.80, up 1.55% in intraday trading.
The brokerage firm Jefferies has given a ‘Buy’ rating on M&M, setting a target price of Rs 4,075.
Let’s take a look at the five key reasons why Jefferies believes this is a buying opportunity for M&M investors.
Jefferies on M&M: Limited impact on M&M from Tesla in near-term
The brokerage house in its report said that M&M shares have fallen 14% in the last 10 days, while the Nifty 50 index has only dropped 1%. This sharp dip is primarily due to concerns over Tesla’s entry into India and M&M’s EV order book.
However, Jefferies believes the impact on M&M will be limited in the near term due to the difference in price points and the government’s EV policy.
“We see the recent fall in MM as a buying opportunity. Its 20x core FY26E PE is attractive for 18% FY25-27E EPS CAGR,” says the brokerage in its report.
Jefferies on M&M : Government push for EV manufacturing
Furthermore the brokerage in its report noted that the Indian government announced a new EV policy in March 2024 to attract foreign investments. “OEMs that commit to invest at least Rs42bn ($0.5bn) in manufacturing are allowed to import up to 8K vehicles/year (CIF value $35K+) at a reduced import duty of 15% (vs 70-100% currently) for 5 years,” said the brokerage in the report.
However, the impact on M&M is expected to be minimal due to high price limits and import volume restrictions under the policy.
Jefferies on M&M: Tesla’s potential entry not major threat
Many fear that Tesla’s potential entry into India could impact domestic automakers. However, Jefferies disagrees with is and noted that , “We don’t see Tesla’s potential entry as a significant threat to MM given: 1) the large gap in existing portfolio prices, 2) lack of visibility on Tesla’s plans for local manufacturing, and 3) EVs form just 3-5% of our FY26-27E total volume estimates for MM.”
Jefferies on M&M: Strong demand for EVs
M&M’s new electric SUVs, the XUV-e9 and BE-6, have received a strong market response. The company recorded 30,000 bookings on the first day of launch.
Jefferies notes that this is 30% of India’s total EV sales in 2024, signaling strong demand for the brand’s upcoming models. It expects M&M to sell 48,000 EVs in FY26 and 80,000 in FY27.
Jefferies on M&M: Subsidiaries and market position
Moreover, the brokerage in its report pointed out that the automaker is also strengthening its financial position through its subsidiaries. Mahindra Finance and Mahindra Lifespace have announced rights issues worth Rs 3,000 crore and Rs 1,500 crore, respectively.