M&M’s share price is up over 4% in intra-day trade. The share has been in focus on the back of a host of upgrades. After Nomura upgraded M&M to Buy and Jefferies retained its Buy rating, UBS has also upgraded Mahindra & Mahindra stock to ‘Buy’ from ‘Neutral’. Improving risk-reward ratio is one of the big factors according to UBS.
Here are 3 reasons why UBS upgraded M&M
According to UBS, “We upgrade the stock to Buy as the risk/reward has turned favourable,” said UBS in a research note. However, the brokerage firm revised the target price slightly lower to Rs 3,300 from Rs 3,460.
Here are the 3 top triggers –
UBS on M&M: SUV segment’s volume to grow
The brokerage firm expects M&M’s volume to grow 9% in the next fiscal year, which will be led by strong demand for its SUVs and launch of EVs. “The 30,000 bookings number for recently launched EVs, though below ours and street estimates, is still strong given EV volumes in Jan’25/CY24 in India stood at 12k/98k units,” said UBS. In November 2024, the company launched two new electric vehicles, the BE 6e and the XEV 9e. The brokerage expects more product intervention in SUVs from M&M in FY26. Moreover, farm equipments (FES) are seeing robust demand with no imminent threat of technology or regulatory disruptions.
UBS on M&M: Tesla not a threat
Tesla’s entry into Indian markets is not a threat to M&M as the Model 3 is not suited for Indian roads due to its low ground clearance and Sedan form factor. The Model Y, which is a relevant model for the Indian market, is expected to be launched around Rs 50 to 60 lakh with 15% customs duty while Mahindra’s XEV 9e top-end variant’s launch price is Rs 33 lakh. Tesla’s Model Y pricing pits it against EVs such as Kia EV6, BYD Seal and Hyundai Ioniq 5, which together clock volumes less than 200 units/month. “Our Tesla analyst Joseph Spak believes Tesla’s India foray could be limited to imports in the near to medium term,” said UBS.
UBS on M&M: Farm equipment sale to grow
M&M’s farm equipment business, which contributes 40% of EBIT, delivered strong numbers in the third quarter of FY25 while the market share jumped 240 basis points. The company’s management expects tractor industry to grow 15% YoY in Q4 FY25 and foresees further growth in FY26 supported by a favourable rural macro and strong reservoir levels of 64%. Moreover, the segment remains on the positive side of the regulatory environment – both in terms of gov’t support for the farming industry and emission norms. “M&M has been steadily gaining market share in tractors,” said UBS.