M&M, Sun Pharma, Indian Hotels, Motherson Wiring, Ramco Cements, Aditya Birla Lifestyle & More Q2 Review

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HDFC Securities Institutional Equities

M&M - Core business set for continued robust growth

Mahindra & Mahindra Ltd.’s Q2 FY26 standalone Ebitda margin, at 14.5%, beat the Bloomberg consensus and our estimate of 14%. The core business of autos and tractors continues to perform well, with margins improving.

However, going forward, we expect higher ePV contract manufacturing and the recognition of PLI benefits in subsidiaries will impact standalone auto business margins in the near to medium term, as the company continues to expand its EV portfolio.

This should improve the financials of the EV subsidiaries. We value the company on a SOTP basis, valuing the core business at 21x Sep-27 EPS for a target price of Rs 4,092; and maintain an Add rating.

Indian Hotels - Long-term outlook strong despite short-term headwinds

Indian Hotels Company Ltd.’s Q2 FY26 performance was relatively soft as the hotel sector faced headwinds such as excessive rainfall in key locations, landslides in hilly areas, geopolitical conflicts-led slow domestic demand, and slowdown in airline traffic.

Higher number of auspicious wedding days in the base quarter Q2 FY25 resulted in a modest 12% YoY revenue growth. Soft high single digit RevPAR growth was mainly led by modest average room rate increase, whereas occupancy remained high at ~75%.

Amid extraordinarily strong occupancy rates (75- 84%), YoY RevPAR growth remained muted for Delhi, Mumbai, and Goa whereas it was strong for Bengaluru, Kolkata, and Hyderabad. This can be attributed to lower hotel availability as renovation was carried out in H1 FY26 in key hotels in Mumbai, New Delhi, and Goa.

Upcoming MICE activities such as Aviation event Wings India, AI Impact summit, ICC Men’s T20 world cup, planned medical conferences, music concerts, and wedding season are expected to revive hotel demand in H2 FY26.

Further, long-term hotel supply growth of 7% during FY25-30E is estimated to lag demand growth of ~10%+ in key locations, leading to sustained high occupancy and healthy ARR growth.

We have built in ~20% Ebitda growth during FY25-27E, led by double-digit RevPAR growth and operating leverage. Accordingly, we have maintained our estimates for FY26E and FY27E.

Furthermore, due to rich valuation, we maintain our Reduce rating with an EV/Ebitda multiple of 25xFY27E and an unchanged target price of Rs 725.

Motherson Sumi Wiring - India Good presence in new model launches is aiding growth

Motherson Sumi Wiring India Ltd.’s Q2 FY26 Ebitda margin at 10.13% declined by 60 bps YoY but improved 33 bps QoQ. It was in line with our estimate of 10.16%, though it missed the Bloomberg consensus estimate of 10.31%.

After adjusting for the financials of the greenfield plants, the adjusted Ebitda margin stood at 12.7% (up almost 92bps QoQ). We believe that as the new greenfield facilities ramp up, they will add to revenue growth, deliver greater economies of scale, and improve operating leverage.

This expansion will also help the company secure additional business, including opportunities for high-voltage EV wiring harnesses, whose total content is 1.5-1.7x greater than that of an ICE wiring harness.

Additionally, the continuing auto industry trends toward more feature-rich vehicles augur well for the company as this will further increase the content per vehicle.

The company is an indirect beneficiary of the GST rate rationalization as OEM customers are witnessing good demand. However, higher copper prices could further impact the gross margin in the near term.

We value Motherson Sumi Wiring India at 29x Sep-27 EPS for a target price of Rs 47; and maintain our Add rating.

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