Mahindra And Mahindra - Working To “Deliver Scale”: Motilal Oswal

Motilal Oswal Report

We estimate Mahindra and Mahindra Ltd. to post a compound annual growth rate of ~18%/20%/20% in revenue/Ebitda/PAT over FY24-26.

While M&M has outperformed its own set targets on earnings growth and return on equity of 18% in FY24 itself, it maintains long term guidance of 18% RoE, as it has now guided for capex guidance (including investments) of Rs 370 billion for FY25-27E from Rs 175.6 billion invested during FY22-24. The implied core P/E for M&M stands at 27.8x/22.5x FY25E/FY26E EPS.

We maintain our Buy rating with a revised target price of Rs 3,300 (based on June-26E SOTP).

M&M's annual report FY24 outlines its strategic focus on its journey to "Deliver Scale" across its businesses, categorized into three buckets.

First, it aims to capitalize on market leadership in SUVs and tractors by expanding its market presence through customer-obsessed brands, pioneering technology leadership, and global reach.

Second, the company is focusing on unlocking the full potential of Mahindra Finance and Tech Mahindra, recognizing their significant potential for value creation. Both businesses have unique strengths that position them to become leaders in their respective segments.

Lastly, its ‘Growth Gems’ are expected to achieve a fivefold increase in scale and value over the next five-seven years. It remains committed to delivering 15-20% EPS growth and 18% return on equity, ensuring sustained profitability and shareholder value.

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