Mahindra & Mahindra shares fall after Q4 results; should you buy

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Published: May 30, 2019 3:48 PM

Shares of Mahindra & Mahindra (M&M) fell after the dismal Jan-Mar financial results. today, its shares ended at Rs 660.80 per share, 11.45 points or 1.7 per cent down from the previous close on BSE.

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Mahindra & Mahindra shares fall around 2 per cent after Jan-Mar dismal earnings

The shares of Mahindra & Mahindra (M&M) fell on Thursday after the company posted dismal Jan-Mar financial results. Today, its shares ended at Rs 660.80 per share, 11.45 points or 1.7 per cent down from the previous close on BSE. M&M reported a 16.07 per cent fall in its consolidated net profit to Rs 969.25 crore for the fourth quarter of FY19 as compared with Rs 1,154.88 crore of last year’s corresponding quarter. This includes numbers for Mahindra Vehicle Manufacturers Limited or MVML.

Slow down in the rural economy doesn’t augur well for the economy and the company is likely to face some pressure on its margins going ahead. However, Reliance Securities believe that the company’s new XUV300 would drive the company’s overall sales and profitabilities going forward. The brokerage firm remains positive on the stock on account of the government’s focus on rural development and new product launch. Post sharp price correction, the stock looks attractive at current valuation, Reliance Securities added.

Also read: Little to cheer for PSU banks in July Budget; no govt recapitalisation till December

Motilal Oswal Financial Services has maintained a “BUY” position with a SOTP-based target price or TP of Rs 810  on M&M stock as the brokerage house expects the tractor industry to grow 5 per cent, domestic passenger vehicle industry growth to be better than the SIAM outlook of 3-5 per cent and commercial vehicle industry growth of 10-12 per cent.

The fall in both the tractor and automotive industry during Jan-Mar of FY19 is on account of muted demand in rural India. The poor distribution of the South-West monsoon, a deficit North-East monsoon and weak agricultural incomes due to poor price realisation led to sluggish rural demand. Stress in the NBFC sector along with low demand in urban India and the overall slowdown in the economy led to a fall in both the tractor and automotive industry, according to the company’s release.

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