Buy This Major Homegrown Auto Sector Stock For Gains Up To 11%, Says Edelweiss Wealth Research

Edelweiss Wealth Research in its pick of the week-Fundamental Research report published on 28 October 2022 has given a buy call to Mahindra & Mahindra Limited for a target price of Rs 1,455 per share. According to the brokerage's estimated target price and the current market price, the stock is likely to jump 11% from its current level.

Mahindra & Mahindra Limited is one of the leading homegrown auto sector companies in India with a pan-India presence and international footprint. It is a large-cap auto company having a market cap of Rs 1,63,063 crore.

Mahindra & Mahindra (M&M) operates through various segments- automotive (sales of UVs/CVs and 3Ws, spare parts and related services); farm equipment (tractors, spare parts and related services); financial services (services related to financing, leasing and hire purchase of automobiles and tractors); steel trading & processing; infrastructure; hospitality, IT services and telecom.

Stock Outlook & Returns

The stock last traded at Rs 1,311.81 per share on NSE As compared to its previous close of Rs 1,294.15, the stock gained 1.35% on Friday, 29 October 2022. It has given 4.37% positive returns in the past 1 5 days, whereas, in the past 1 month, the stock has given 5.57% positive returns. In the past 3 months, it has given 14.14% positive returns. Over a year, it gave 48.4% positive returns. In the past 3 years, it gave a positive return of 121.75% and in the past 5 years, it gave 89.04% positive returns, respectively.

 
The ROE of the stock is 13.95%, and the debt-to-equity ratio is 1.58. With a face value of Rs 5, its Dividend yield is 0.88%. The stock's 52 week low is Rs 671.15 and the 52-week high is Rs 1,338, respectively. 

Key highlights

According o the brokerage, the key highlights are as follows:

• We expect UV business to get back on track given the company's strong focus on addressing product gaps and refreshes & petrol variants launch across its portfolio.
• The tractor business is in a sweet spot and well placed to benefit from robust industry demand and sustain market share gains, riding new launches and network expansion.
• The MSPL deal, while not meaningful on the overall scheme of things indicates the intent of company to monetise assets, irrespective of the size of the asset.
• As the RoIC drags get addressed, the true franchise value of the tractor and LCV business would be recognised, in our view. Furthermore, some of the RoIC drags have started contributing to cash flows post-restructuring.

Risks

According to the brokerage, the key risks to their estimates are Losses in unlisted subsidiaries, Managing a complex group structure and Competitive intensity in UV market.

Disclaimer

The stock has been picked from the brokerage report of Edelweiss Wealth Research. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.