Auto sector major Mahindra & Mahindra is a key stock in focus today. The M&M share price has rallied over 3% after brokerages gave a thumbs up to the SUV product ramp-up plans. The Q1 earnings were mostly in line with estimates despite commodity inflation and MTM losses on hedges.
However, analysts are optimistic about the company’s target to double the automotive capacity in 5 years and the strong launch pipeline. Many brokerage houses like Nuvama and JM Financial, raised the target price and the stock got a ‘Buy’ rating from most major brokerages.
Here is a quick look at how brokerages are rating the stock.
Motilal Oswal on M&M: Maintain ‘Buy’
Motilal Oswal reiterated ‘Buy’ on M&M with a target price of Rs 4,108 per share on the back of a healthy launch pipeline and positive consumer sentiment. The target price implies nearly 25% upside from current levels. They expect M&M revenue to grow 16% annually between FY26-FY28 and the profit in the same period is seen to be growing 14% annually on a compounded basis.
The management is gung ho about scaling its SUV capacity. It targets to double it in the next 5 years. This is because M&M is expected to increase its PV capacity to 82,000 vehicles per month by FY27-end. This would include EVs and ICEs. Beyond this, they look to add 10,000 units per month capacity in Chakan for the NU iQ platform. Further, the company’s greenfield at Nagpur is expected to add 40,000 units per month by the end of H1FY31 in two phases.
Motilal Oswal is betting on the management’s strong outlook for FY27 across segments – the tractor industry is seen growing at mid-single digits, while UVs are expected to clock growth in the mid-to-high teens region. The LCV industry is also expected to clock high single-digit growth.
The M&M management expects auto margins to recover gradually from Q2 through pricing actions, operating leverage, and cost optimisation, while commodity prices remain the key monitorable. According to them, farm profitability is expected to improve from H2 as seasonal demand strengthens and commodity inflation moderates. EV profitability is expected to continue improving through scale, localisation, and platform leverage, with management confident of achieving ICE-like profitability over time without relying on PLI incentives.
Nuvama on M&M: Target price raised
Nuvama too has a positive call on M&M. Not only did they retain the ‘Buy’ rating but also increased the target price to Rs 3,900 from Rs 3,800 per share. This implies 14% upside from current levels.
Nuvama expects that M&M’s auto segment revenue to grow at 16% annually over FY26-FY28 on a compounded basis. This would be driven by healthy demand and new launches, while farm revenue is likely to moderate to a 4% CAGR following strong 25% growth in FY26.
Overall, Nuvama predicts a strong growth trajectory for this Mahindra Group stock. They believe that BEVs are likely “to support growth ahead and be compliant with CAFÉ norms M&M has highlighted its medium-term target of E-PV penetration of 20–30% and plans to expand its BEV portfolio by launching multiple products by 2030.”
The brokerage house expects BEV volumes of 90,000 vehicles in FY27 and 122,000 units in FY28, accounting for 12% of domestic UVs in this financial year and 14% in FY28. They believe that this would enable the company to meet upcoming CAFE3 norms.
JM Financial on M&M: Raises target price
JM Financial also raised the price target on M&M to Rs 3,905 per share and retained the Buy rating. This implies around 14% upside from current levels. The brokerage house is positive on M&M amid near-term volatility. They have revised the EPS also higher, marginally.
For the auto segment, JM Financial is factoring in 10% SUV volume growth in FY27. On margins, they believe that the “commodity-linked pressure is expected to continue, especially in the farm segment.” The management expects automotive margins to improve, led by pricing actions, cost optimisation and operating leverage.
HSBC Securities on M&M: Maintain ‘Add’ rating
HSBC Securities also maintained an ‘Add’ rating on the M&M stock with a target price of Rs 4,087 per share. This implies a 20% upside from current levels.
According to the brokerage house, “while autos are better placed due to continuing demand momentum and the opportunity to fill channel stock, the farm segment is facing uncertainty due to forecast of a subpar monsoon season and could even continue to witness raw material pressure in Q2, as key commodities such as steel and rubber are not hedged.”
Emkay on M&M: Retain ‘Buy’
Emkay too retained the ‘Buy’ rating given the robust SUV demand. They have set a target price of Rs 4,100, implying 24% upside from current levels.
M&M indicated strong underlying demand with robust booking/enquiry momentum across its SUV portfolio. Emkay pointed out that “while farm demand has been sturdy (despite El Niño concerns), M&M believes Q2 could see operating deleverage given that festive season is in Q3.” There are expectations of volume pick up in Q3 as a result of the festivities – Navratri and Diwali. M&M “is scrambling to increase its SUV capacity and targets 68k/mth (kpm) units by September.”
They consider the fact that M&M is on track for the launch of the NU-IQ platform in Chakan by FY28-end as another positive. In Q1, M&M saw 450 bps commodity impact in the auto segment and around 300 bps impact in the farm segment. This was partially offset by calibrated price hikes and cost control measures. Though M&M expects farm margins to be under pressure, the auto margins may be stable and improve slightly. Emkay has cut the FY27 and FY28 EPS estimates by 2-4% due to commodity-led margin pressure.
Conclusion
Overall, brokerages believe that M&M could potentially overcome the near-term volatility on the back of the strong demand outlook in the second half of the year, especially during the festive season. Some analysts believe that the stock could run up as much as 20-25% from current levels.
Disclaimer: The price targets and brokerage ‘Buy’/’Add’ ratings cited in this report reflect third-party analyst estimates and are provided strictly for informational purposes. They do not constitute an offer, solicitation, or direct recommendation to buy, sell, or hold any financial security. Stock market investments carry inherent market risk; readers are strongly advised to evaluate their risk appetite and consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.