Mahindra & Mahindra's Strong SUV Sales Drives UBS' 'Buy' Upgrade

UBS has upgraded Mahindra & Mahindra Ltd. stock to a 'buy' rating based on the strength of its core SUV business, signalling confidence in the future performance of the company. While, the target price has been trimmed to Rs 3,300 from Rs 3,460 earlier.

Despite industry-wide concerns of a possible slowdown, M&M's projected growth hovers around 2%. A 9% volume growth is expected in financial year 2026 and the optimism is fueled by the stable demand for SUVs.

This is also paired with the strategic launch of new EVs. UBS addressed Mahindra's EV bookings, its farm equipment segment, and the potential impact of Tesla's entry into the Indian market.

SUV Segment To See Volume Growth

Amid an industry slowdown, the brokerage expects M&M to grow 9% in financial year 2026. Demand for EVs, though below the brokerage's estimates, is still strong, it noted. More product intervention is also expected from the company, especially for SUVs in the coming year.

UBS notes that the farm equipment segment has a clear runway with robust demand with no imminent threat of technology or regulatory disruptions. The brokerage calls the recent share price that happened on the back of EV-related news an 'over-reaction.'

Tesla Not A Major Threat

The brokerage sees limited impact of Tesla's India entry as the prices of the Model 3 may not work well in the market due to low ground clearance, according to analysts. Tesla's Model Y pricing pits it against EVs such as Kia EV6, BYD Seal and Hyundai Ioniq 5, which together bring volumes of under 200 units per month.

"Our Tesla analyst Joseph Spak believes Tesla's India foray could be limited to imports in the near to medium term," said the brokerage.

Farm Equipment Business To Do Well

The company's farm equipment business delivered strong numbers in the third quarter. Management expects tractor industry to grow 15% in the fourth quarter, and sees further growth backed by favourable rural macro and strong reservoir levels, UBS noted.

Further, the segment remains on the positive side of the regulatory environment, when it comes to government support and emission norms.

M&M Shares Price

M&M stock rose as much as 3.6% during the day to Rs 2,707.5 apiece on the NSE. It was trading 3.45% higher at Rs 2,703.9 apiece, compared to a 0.63% advance in the benchmark Nifty 50 as of 10:19 a.m.

It has risen 39.24% in the last 12 months. Total traded volume so far in the day stood at 1.1 times its 30-day average. The relative strength index was at 41.2.

Thirty eight out of 40 analysts tracking the company have a 'buy' rating on the stock, one recommends a 'hold' and one suggests a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 3,597.3, implying an upside of 33.8%.