In a note on Mahindra & Mahindra, Edelweiss said it believes FY19 would be a defining year for the company as the success of its two new launches, U321 and S201, would be critical for a re-rating.
Mahindra & Mahindra (M&M) became the 30th to join the exclusive club of Indian companies with a market capitalisation of over Rs 1 lakh crore (or Rs 1 trillion) on Tuesday, after its stock gained 1.05% to close the day at a record high of Rs 809.60. The company ended the day with a market capitalisation of Rs 1,00,649 crore. M&M is the third-biggest automobile company by market capitalisation after Maruti Suzuki and Tata Motors, and presently trails the second ranked Tata Motors by just Rs 6,297 crore in market capitalisation.
In a note on Mahindra & Mahindra, Edelweiss said it believes FY19 would be a defining year for the company as the success of its two new launches, U321 and S201, would be critical for a re-rating. The note added that rural demand is expected to remain strong. “This should benefit all three key businesses of M&M – tractors, UVs and CVs,” it said. Analysts said the forecast of a good monsoon which is likely to boost crop prices and rural income helped the shares of M&M gain on Tuesday, a day when the benchmark index Sensex rose just a quarter of a percent. India Meteorological Department (IMD) on Monday said India would have a normal monsoon. IMD added that there is very low probability of a deficit monsoon.
“Near-term prospects are good. Tractors and LCV growth have been surprising positively. Margins for the year has surprised positively, and the outlook for tractors and LCVs remains positive for the next 12 months, the value of listed investments have appreciated. Going forward even on passenger vehicles, which is the weakest link, they have some new launches planned and this will support the near term numbers,” said an analyst requesting anonymity. Of the 42 analysts who track the stock 40 gave a ‘buy’ rating and ‘Two’ a hold rating. A total of 44.83 lakh shares were sold on both BSE and NSE; this is 1.7 times more than its daily traded average of three months.