Mahindra & Mahindra Gets Anand Rathi's 'Buy' Initiation On Strong Market Share Gains

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Anand Rathi Report

We are positive regarding Mahindra & Mahindra Ltd. due to its domestic market share gains across passenger vehicles, commercial vehicles and tractors. We expect volumes to grow at a 9% CAGR over FY25-27, driven by 12% in PVs (launches), 6% in tractors (on the favorable regional trend and launches), 6% in CVs (rising share of pick-ups) and 15% in exports (on the favourable base and launches).

Realization growth would be notable at 8%, owing to a higher share of EV models (FY26e/27e mix at 8%/12%; value 2x higher than the average).

We expect standalone + MEAL’s revenue to grow by a strong 18% CAGR over FY25-27.

We, thus, initiate coverage on the stock with a Buy rating, and a sum-ofparts target price of Rs 3,600.

Key risks

• Slower-than-expected domestic industry volume trends.

• Keener competition.

• Adverse commodity prices/forex rates.

• Gradual EV penetration. M&M future product expansion in PV segment is focussed more towards EV portfolio expansion. Slower market for EVs could limit growth for its EV volumes.

• Capital allocation discipline. M&M is expected to generate strong free cash flows of Rs 90 billion/ year. It is important to see the future allocation of the capital towards growth. Considering the diverse segments of the group, company may look to expand into new businesses ahead. Key would be balance investment strategy. Losses in overseas subsidiaries. Overseas auto and farm subsidiaries sustenance or increase of losses could impact the stock valuation multiple ahead. FY25 Ebit losses at Rs 7.8 billion.

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