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Motilal Oswal Report
Led by a healthy recovery in rural areas and new product launches in both utility vehicles and tractors, Motilal Oswal believes Mahindra and Mahindra Ltd. is well placed to outperform across its core businesses. The brokeage estimates M&M to post a CAGR of ~18%/18%/20% in revenue/Ebitda/PAT over FY25-28.
While M&M has outperformed its own targets of earnings growth and RoE of 18%, it remains committed to delivering 15-20% EPS growth and 18% RoE, ensuring sustained profitability and shareholder value.
The brokerage reiterate Buy with a target price of Rs 4,378 (based on Dec27E SoTP).
M&M Q3 Results
- M&M's revenue grew 26.1% YoY to Rs 38,500 crore slightly below our estimate of Rs 40,300 crore, due to lower-than-expected ASP growth in the Auto segment.
- Ebitda margin expanded 100 basis points YoY to 14.7% and was slightly ahead of the brokerage's estimate of 14.5%.
- Ebitda grew ~27% YoY to Rs 5,670 crore and was broadly in line with our estimates.
- Tractor Ebit stood at 20.2%, up 210bp YoY/50bp QoQ vs our estimates of 20.0%, while overall auto margins came in at 9.5% (-20bp YoY and +30bp QoQ) vs our estimate of 9.4%.
- The company incurred a one-time extraordinary expense of Rs 98.2 crore due to changes in the labor code.
- Higher dividend income from its subsidiaries led to strong growth in other income, which came in higher than our estimate at Rs 75 lakh (estimate of Rs 410 crore). This was largely offset by the higher-than-expected tax rate.
- Adjusted PAT grew 35% YoY to Rs 4,000 crore for Q3 FY26, and was largely in line with our estimates.
- M&M's RoE for 9MFY26 stood at 20.1%, well ahead of its target of 18%.
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