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ICICI Securities Report
Mahindra and Mahindra Ltd.'s Ebitda margin, at 14.9% (up ~200 basis points QoQ), was 110 bps higher than consensus. Auto/farm equipment segment's Ebit margin was up 70 bps/270 bps QoQ at 9.5%/18.5%.
M&M is planning SUV capacity expansion to 64,000 units/month by end-FY25, from 49,000 units (as of FY24-end). The company also has an order backlog of ~178,000 units as of end-Q1.
We believe, with the recently launched XUV3XO, monthly utility vehicle production levels should move over 45,000 units/month soon.
Maintain Buy with an SoTP-based revised target price of Rs 3,349 (earlier Rs 3,365), implying 28 times FY26E core EPS.
Downside risks
Rising competitive intensity in UV space.
Slowdown in domestic UV market post robust growth across FY22-24.
Sharper-than-expected decline in tractor market in FY25 post general elections.
Increase in EV launches FY25 onwards may put pressure on profitability in auto segment.
Re-emergence of capital allocation in non-core areas.
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