Mahindra & Mahindra share price jumped 3.7% to Rs 1,519.75 today after the automaker’s net profit zoomed 98% to Rs 2,774 crore on-year in Q1FY24, compared to Rs 1,404 crore in the year-ago period. Revenue from operations in the quarter ended June, rose 22% on-year to Rs 24,056 crore. M&M’s MD & CEO Anish Shah in a press conference clarified the company’s investment in RBL Bank. “RBL Bank investment is for us to understand banking in greater detail. At this stage, we will not raise further stake in RBL Bank.” Last month, M&M acquired a 3.53% stake in RBL Bank for Rs 417 crore. The majority of brokerages have recommended a ‘Buy’ rating on the stock. M&M stock has fallen 3% in the last one month while it has gained 22% in the past one year.
Should you buy, sell or hold M&M stock?
Prabhudas Lilladher: Buy – Target Price: Rs 1760 (15.8% upside)
“M&M should benefit from (1) growing customer preference for SUV, (2) ramp-up in production to fulfil strong demand and order book, (3) market share gains in the tractor industry from new segments, (4) ramp-up in EV portfolio starting 2025. Also, benign RM, operating leverage and the end of a volume of the introductory priced model would benefit margins (we built in c160bps expansion over FY23-25E). Retain ‘BUY’ with a target price of Rs 1,760 (18x on Mar-25E core EPS and Rs 360 for subsidiaries) vs Rs 1,685 earlier.”
LKP Securities: Buy – Target Price: Rs 1727 (13.6% upside)
“We maintain BUY on attractive valuations; SoTP-based target price stands at Rs 1,727 (Rs 1,382 core business valued at 12x FY25E earnings + subsidiary valuation of Rs 345) in line with our assumptions of margin improvement on increase in volumes and value of SUV, 3Ws and LCV segments, decent growth in FES, production increase offering operating leverage, price hikes and prudent cost reduction measures.”
Motilal Oswal: Buy – Target Price: Rs 1725 (13.5% upside)
“While the valuation is still attractive vs. peers, MM has seen a substantial rerating in FY23 as the stock is now trading in line with its five-year average core P/E (against discount of 30% earlier), driven by a strong performance in the SUV segment, market share gain in tractors and new launch pipeline in EVs. We maintain our BUY rating with a target price of Rs 1,725 (based on Sep’25E SOTP).”
JM Financial: Buy – Target Price: Rs 1675 (10.2% upside)
“Management indicated that investment in RBL bank (3.5% stake) is primarily to understand the banking industry. Driven by a strong demand tailwind in autos, we maintain BUY with a Jun’24 target price of Rs 1,675 (SOTP valuation, 16x core business). The peaking tractor cycle is the key risk to our call.”
HDFC Securities: Buy – Target Price: Rs 1674 (10.1% upside)
“While the recent stake buy of RBL posed serious concerns around capital allocation, we believe as long as they continue to focus on their core business segments and work towards achieving their long-term targets, investors should not be too concerned. Maintain BUY, with a revised target price of Rs 1,674/share (earlier at Rs 1,617/share) as we roll forward to June’25 EPS.”
Emkay: Buy – Target Price: Rs 1590 (4.6% upside)
“We maintain BUY on M&M, given the undemanding valuations (~14x FY25E standalone core PER). Our SOTP-based target price stands at Rs1,590/share (Rs1,500 earlier; incl. Rs470/sh for subsidiaries/investments).”