Automobile giant Mahindra & Mahindra's June-quarter results may have exceeded Street estimates on profit and revenue, but brokerages believe the bigger story lies ahead. While Citi said the company's EBITDA was marginally below expectations and profit was supported by higher other income, it remains cautiously optimistic on the outlook, citing continued momentum in electric vehicles and positive rural sentiment.
Morgan Stanley, meanwhile, flagged near-term pressure on farm margins as it expects earnings to recover in the second half of FY27. Macquarie, on the other hand, said M&M remains well positioned to navigate macro headwinds with a strong SUV pipeline and resilient tractor demand.
Kotak Securities also described the quarter as a marginal miss due to weaker automotive profitability amid commodity headwinds, though it retained its positive stance on the stock.
ALSO READ: M&M Q1 Result: Net Profit, Revenue Beat Estimates — Key Numbers Inside
Brokerages Decode
Morgan Stanley
- Maintained Overweight with a target price of Rs 4,222.
- Said the June quarter was a tad weaker than expected, while expecting a gradual earnings recovery in the second half of FY27.
- Flagged that farm margins could face further headwinds in the September quarter.
- Expects auto margins to improve sequentially, although the company did not quantify the likely benefit.
- Said FY27 could be an exciting year for M&M, with incremental growth likely to be driven more by its internal combustion engine (ICE) portfolio.
Macquarie
- Maintained Outperform with a target price of Rs 4,066.
- Described the quarter as largely in line with expectations, while noting near-term macro headwinds remain.
- Remains constructive on the company's growth outlook despite the challenging environment.
- Said M&M is in a "sweet spot" with multiple SUV launches planned over the next 12-24 months and resilient demand in the tractor business.
Citi
- Maintain Buy; Cut TP to Rs 4,260 from Rs 4,470
- Q1 Results: EBITDA Marginally Below Estimate, PAT Boosted by Higher Other Income
- Outlook cautiously optimistic
- In Auto segment, EVs continue to drive growth
- In the farm equipment segment, rural sentiment is positive
Kotak Securities
- Maintain Buy; Hike TP to Rs 4,175 from Rs 4,050
- Marginal miss
- Weaker profitability in automotive division due to commodity headwinds
- Cut FY27-29 standalone EPS estimates by 1-2%
M&M's Q1 Performance Highlights
Mahindra & Mahindra reported a 6.8% year-on-year (YoY) rise in standalone net profit to Rs 3,685 crore, ahead of Bloomberg estimates of Rs 3,569 crore. Revenue increased 23% to Rs 41,920 crore, also marginally surpassing Street expectations.
Operating performance, however, was softer than anticipated. EBITDA rose 7.9% to Rs 5,111 crore, while EBITDA margin contracted to 12.2% from 13.9% a year ago, missing analyst estimates.
The automotive business remained the key growth driver, with total volumes rising 23% to 304,000 units, while utility vehicle volumes reached 175,000 units. The farm business also posted healthy growth, with tractor volumes increasing 18% and market share improving to 44.9%.
Across its broader portfolio, Mahindra Finance, Tech Mahindra, Mahindra Lifespaces and Mahindra Logistics all delivered healthy growth, helping consolidated revenue rise to Rs 57,533 crore, while consolidated profit after tax increased to Rs 5,998 crore.
Separately, the board approved the proposed amalgamation of Mahindra Investments Ltd. with Mahindra & Mahindra, subject to regulatory and shareholder approvals.
Commenting on the quarter, Group CEO and Managing Director Anish Shah said the company delivered a strong start to FY27 despite macroeconomic headwinds, supported by the resilience of its diversified businesses and continued momentum across its automotive, farm and services segments.
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