Mahindra & Mahindra share price was trading 4.2 percent higher on Friday and the stock touched an intraday high of Rs 2918. The stock opened the session at Rs 2798 and has witnessed a strong move as NSE Nifty jumped around 11 am. As markets have touched all-time highs for major indices, M&M share price witnessed a strong move. The stock is close to its 52-week high at Rs 3013.

In August 2024, ICICI Securities and Geojit BNP Paribas recommended BUY calls for Mahindra & Mahindra (M&M), highlighting the company's strong performance and future growth potential. M&M's automotive segment has been a key revenue driver, supported by robust sales growth across vehicles and financial services. The company has also gained market share in the tractor segment and launched the Veero LCV series to expand its presence in the commercial vehicle market. With favorable market conditions, strategic expansions, and new product launches, M&M is poised for continued success in the coming quarters.

Brokerage Firms Recommend BUY Calls for Mahindra & Mahindra

Analysts Issue Optimistic Target Prices:
Both ICICI Securities and Geojit BNP Paribas have issued BUY recommendations for M&M. Geojit BNP Paribas set a target price of ₹3,026, while ICICI Securities suggested a target of ₹3,349. These ratings reflect strong confidence in M&M’s growth trajectory, driven by consistent performance in its core automotive and financial services sectors.

Automotive Segment Fuels Revenue Growth

Consolidated Revenue Boosted by Auto Sales:
M&M's consolidated net revenue from operations grew by 9.8% year-over-year (YoY) to ₹37,218 crore in Q1 FY25. The automotive segment was a standout, with revenue increasing 16.3% YoY to ₹19,776 crore, spurred by a 14% YoY rise in auto volumes to 212,000 units, including Mahindra Last Mile Mobility's contributions. Financial services also saw a surge, with revenue up 20.7% YoY to ₹4,280 crore.

Mixed Performance Across Other Segments:
While the farm equipment segment's revenue remained flat YoY at ₹9,711 crore, its volume rose by 5% YoY to 120,000 units. The industrial and consumer services segment saw a slight dip of 0.9% YoY to ₹4,456 crore. However, the company's subsidiary, Growth Gems, experienced a 34% YoY growth to ₹23 crore, driven by robust occupancy in its hospitality ventures and strong real estate presales.

Outlook: Strong Growth Drivers Ahead

Favorable Market Conditions and Strategic Initiatives:
M&M’s sustained revenue growth is attributed to higher volumes, market share gains, and solid performance across various segments. Management anticipates continued momentum in H2 FY25, supported by favorable monsoons, increased government spending in rural areas, and upcoming festival season demand. Cost efficiencies, new product launches, and strong bookings further bolster the long-term outlook.

Revised Target Price and Market Share Gains in Tractors:
The company's market share in the tractor segment rose by 180 basis points YoY to 44.7%, despite the industry growing by just 1%. Farm Equipment Sector (FES) EBIT margins improved by 270 basis points quarter-over-quarter (QoQ) to 18.5%, with expectations to maintain this level. Export volumes jumped 45% YoY, reaching 4,500 units, driven partly by a strategic reallocation of supply chains.

ICICI Securities Maintains BUY Call with Revised Price Target

Valuation and Core Earnings Projections:
ICICI Securities reaffirmed its BUY recommendation on M&M, setting a revised SoTP-based target price of ₹3,349. This target implies a valuation of 28 times FY26E core EPS, underscoring the firm’s positive outlook on M&M’s operational and financial trajectory.

Launch of Veero LCV Series to Strengthen Commercial Vehicle Segment

Expansion in the Light Commercial Vehicle Market:
M&M launched the Veero series, targeting the 2-3.5 tonne Light Commercial Vehicle (LCV) segment. Priced competitively at ₹7.99 lakh, the new LCVs aim to bolster M&M’s already substantial 50% market share in the category. The introduction of Veero aligns with M&M’s strategy to expand its commercial vehicle offerings and capitalize on growing market demand.

Significant Investments in Multi-Energy Vehicle Platform:
M&M has invested ₹900 crore in developing the Urban Prosper Platform (UPP), a multi-energy commercial vehicle platform designed to drive the next phase of growth. With a production capacity of 1.2 lakh units annually, the company plans to manufacture 5,000 units of the Veero LCV in its initial phase and explore electric LCV options and export opportunities, further diversifying its portfolio.

M&M's strategic initiatives, strong market positioning, and commitment to innovation continue to set it apart as a leader in the automotive industry. As the company navigates favorable market conditions and leverages new growth opportunities, it remains well-positioned for sustained success.