Mahindra & Mahindra (M&M) Share Price Target at Rs 3,643: Motilal Oswal Research
Motilal Oswal has reaffirmed its positive outlook on Mahindra & Mahindra (M&M), urging investors to maintain a BUY stance on the stock, citing compelling growth drivers across its automotive and farm businesses. The brokerage has set a target price of Rs 3,643, representing an 18% upside from current levels, as the company displays robust financial muscle, strategic launches, and unwavering commitment to value creation.
M&M’s Investment Thesis: Why the Street Favors a BUY
The recommendation is emphatic—hold and accumulate. Motilal Oswal maintains a BUY rating with a price target of Rs 3,643 per share, as M&M’s innovation, execution, and scale position it to outpace sector peers. The stock presently trades at Rs 3,092, with a 52-week range of Rs 2,360–3,276, offering substantive headroom for gains.
- Market capitalization: Rs 3.85 trillion
- Implied Upside: 18% from current levels
- Financial highlight: Estimated EPS growth of 20.5% for FY26E
Performance Metrics: Financial Fortitude and Valuations
M&M delivered steady revenue and profit expansion in FY25, alongside operational efficiency gains. The company anticipates continued double-digit growth and superior returns.
| Year Ended | FY25 | FY26E | FY27E |
|---|---|---|---|
| Sales (Rs Bn) | 1,165 | 1,346 | 1,520 |
| EBITDA (Rs Bn) | 171.2 | 193.9 | 217.0 |
| Adj. PAT (Rs Bn) | 118.5 | 142.8 | 159.7 |
| EPS (Rs) | 98.7 | 118.9 | 133.0 |
| RoE (%) | 20.8 | 21.3 | 20.2 |
| P/E (x) | 31.3 | 26.0 | 23.2 |
| Dividend Yield (%) | 0.8 | 0.8 | 1.0 |
The company has committed to sustaining a dividend payout ratio between 20%–35% of PAT, with FY25 payout at 26.5%.
Pacing Ahead: Automotive Segment Picasso
Mahindra’s automotive division is firing on all cylinders, carving out market dominance in ICE SUVs and launching a pipeline of innovations in both ICE and electric vehicle (EV) categories.
- SUV revenue market share: Climbed 210 basis points year-over-year to 22.5% in FY25, reinforcing M&M’s leadership in this essential growth segment.
- LCV Segment: M&M controls 51.9% share in sub-3.5T LCVs, an increase of 290 basis points.
- Product launches: From the XUV 3XO and Thar ROXX to new BE models and LCVs, Mahindra’s go-to-market acceleration is palpable.
- Export surge: Automotive vehicle exports surged 41% YoY, and new models saw enthusiastic international uptake.
- Next-gen EVs: Building dedicated EV capacity, the company has ambitious plans for its new INGLO electric architecture, projecting eSUVs to constitute 20–30% of the portfolio by 2027.
Farming Outperformance: Strengthening the Agribusiness Arsenal
The farm equipment segment continues to be Mahindra’s crown jewel, with innovation-led market share gains and margin expansion.
- Market share high: Tractor business hit an all-time peak of 43.3% market share in FY25 (up 170 bps YoY).
- Industry trends: The tractor industry is expected to continue its resilient run with M&M outpacing the sector on volume growth—targeting a 7% volume CAGR FY25-27E.
- Profitability fireworks: FY25 farm EBIT margins ramped up 200 bps to 19.7%.
- Global push: Tractor exports jumped 27% year-over-year, spotlighting traction in North America and new geographies in Africa and ASEAN.
Electric Vision: Transforming India’s Auto Landscape
Mahindra Electric Automobile Limited (MEAL) anchors the group’s electric pivot with bold investments and technology differentiation.
- Investment commitment: Rs 120 billion earmarked for MEAL by FY27, funded internally.
- Strategic collaborations: Mahindra’s partnership with Volkswagen augments its INGLO platform with advanced EV components.
- Electrification goals: Five EV launches planned, with two already live and attracting overwhelming response (30,000+ bookings on day one).
“Growth Gems”: Value-Unlocking Potential
M&M has identified ten businesses—its so-called Growth Gems—with the potential to be the next benchmarks in value creation across logistics, holidays, real estate, EVs, renewable energy, and commercial vehicles.
| Segment | FY25 Key Metric | Strategic Objective |
|---|---|---|
| Logistics | Rs 61 bn revenue, +11% YoY | Triple revenue by FY30 |
| Lifespaces | Rs 181 bn GDV | 14x scale-up in residential |
| Holidays | 84% occupancy | Double room inventory by FY30 |
| Last Mile Mobility | 1,08,661 vehicles sold, 18.6% EV growth | 2–3x EV volume jump |
| Susten (RE) | Foray into hybrid, 2.1 GWp deals | Scale to 7 GWp capacity |
| Trucks & Buses | Turned EBITDA positive | Expand market share post SML Isuzu deal |
Balance Sheet and Capital Discipline
The group’s focus on prudent capital allocation, timely deleveraging, and relentless cost discipline underpin its financial health and investment flexibility.
- Capex for FY25: Rs 51.15 billion, primarily funneled into new product creation and capacity enhancements.
- Borrowings reduced: Gross borrowings lowered from Rs 15.8 billion to Rs 11.4 billion in FY25.
- Operating Cash Flow: Robust free cash flow expected to improve further, even with expansionary outlays.
Stock Levels and Investment Takeaways
Motilal Oswal’s Price Targets & Key Metrics:
| Current Price (Rs) | Target Price (Rs) | Recommendation | Potential Upside (%) |
|---|---|---|---|
| 3,092 | 3,643 | BUY | 18 |
- Key support levels: Rs 2,950; Resistance zones: Rs 3,350 (near-term), Rs 3,643 (12-month target)
- SoTP fair value range FY26E–FY27E: Rs 3,267–3,556 per share
The brokerage reiterates its conviction in M&M’s ability to outpace industry averages in both automotive and farm equipment markets, powered by innovation, capital discipline, and a clear EV roadmap. The company’s bold bets on “Growth Gems” provide strategic option value for patient investors.
Final Take
Motilal Oswal’s advisory to BUY Mahindra & Mahindra reflects deep-rooted confidence in the automaker’s strategic direction and execution mettle. With aggressive product cycles, market share gains, a massive pivot to electrification, and sound capital stewardship, M&M emerges as a compelling story for equity investors seeking sustained alpha over the next 12–24 months.
