Mahindra Share: 12 Brokerages Including CLSA, Motilal, Nomura Recommend BUY, Highest TP At Rs 2,143

Auto giant, Mahindra& Mahindra is a hot by many brokerages for double-digit potential upside ahead. A total of 12 brokerages including leading CLSA, Morgan Stanley, Citi, Motilal Oswal, and HSBC have recommended buying. The highest target price set on Mahindra is Rs 2,143 per share, hinting a nearly 16% potential surge in the near term. The brokerages are optimistic after Mahindra's Q3 earnings.

On February 19, M&M's share price closed at Rs 1,848.85 apiece, up by 0.72% on BSE with a market cap of Rs 2,29,909.83 crore. The stock was near its 52-week high of Rs 1,864.65 apiece.

In Q3FY24, Mahindra & Mahindra Group delivered solid operating performance across all businesses, except TechM. Auto continues to gain market share. Farm market share improves despite decline in Industry. Financial services continues its strong performance on asset quality with record low GS3. Growth gems progressing well on 5X challenge with a notable milestone achieved at Susten with a listing of India's largest renewable InvIT. Consolidated PAT at Rs 2,658 cr., up 34% Q3; up 33% YTD. Revenue was at Rs 35,299 crore, up by 15% YoY.

Should You Buy Mahindra & Mahindra share price?

Motilal Oswal:

MM's auto business is expected to be the key growth driver for the next couple of years on the back of its healthy order backlog and new launches. The near-term outlook for tractors remains weak, but we expect tractor demand to revive to mid-single digit growth amid favorable indicators. We estimate a CAGR of ~12%/15%/16% in revenue/EBITDA/PAT over FY23-26.

The implied core P/E for MM stands at 16.8x/15.2x FY24E/FY25E EPS, which is still attractive vs. peers. We maintain our BUY rating with a TP of INR2,005 (based on FY26E SOTP).

LKP Securities:

We maintain BUY rating on attractive valuations; SoTP-based target price stands at ₹2,051 (₹1,676 core business valued at 11x rolled over FY26E earnings + subsidiary valuation of ₹375) in line with our assumptions of margin improvement on increase in volumes and value of SUV where we expect market share to bounce back on new launches, 3Ws and LCV segments, production increase offering operating leverage, price hikes and prudent cost reduction measures. We believe the negatives of the FES segment are factored in the price and we expect a recovery in tractor volumes in FY25E on expectations of normal monsoons by the weather departments.

Religare Broking:

M&M continues to post healthy volume across its Auto Division mainly led by the UV and 3-wheeler category which has led to consistent growth in its revenue and realizations. Going ahead, the management expects its UV portfolio to outpace the industry growth which shall result in revenue and margin expansion as well as maintain its leadership position in the revenue market share.

Additionally, market share growth, new products and improvement in segmental profitability in FE business shall prove to be positive for the company. Further, the monetization of its EV business could turn out to be the next leg of growth for the company. Factoring this, we estimate its revenue/EBITDA/PAT to grow at a CAGR of 15.1%/18.5%/26.9% over FY23-FY26E. We maintain our Buy rating with a revised target price of Rs 1,998.

Elara Capital:

We expect the margin to expand by 120bp during FY23-26E. M&M margin delivery in auto segment has been impressive. We reiterate that Accumulate with a higher SOTP-based TP of INR 1,860 from INR 1,688 as we roll forward to FY26. We value total automotive at ~20x P/E and the farm segment at 18x FY26E P/E with a subsidiary value of INR 400 (from INR 365).

JM Financial:

Gradual addition to SUV capacity (by 4QFY24), high outstanding bookings (226k+ units) and healthy new bookings' rate are likely to drive sales growth. Higher operating leverage and benign commodity costs are expected to support the margin performance going ahead. Driven by strong demand tailwind in autos, we maintain BUY with a Mar'25 target price of INR 1,850 (SOTP valuation, 16x core business). Revival in tractor demand remains a key monitorable.

Other brokerages:

Citi: BUY M&M For Rs 1,890 per share target price.

Nuvama: BUY for Rs 2,080 target price.

CLSA: BUY for a target price of Rs 2,074 per share.

Nomura: BUY for target price of Rs 2,143.

HSBC: BUY for target price of Rs 1,750.

Emkay: BUY for target price of Rs 1,900.

Morgan Stanley: Overweight for target price of Rs 1,925 apiece.

These brokerages have also mainatined positive outlook on Mahindra.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.