M&M reported a better-than-expected operating performance in Q4 FY25, led by a strong margin beat in the farm equipment segment (at 19.4% versus 17.3% estimated). The QoQ margin improvement was particularly commendable as it came in a seasonally weak quarter. Auto segment margins, adjusted for contract manufacturing at MEAL, came in at 10% (+30 bp QoQ).
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Motilal Oswal Report
We believe Mahindra and Mahindra Ltd. is well-placed to outperform across its core businesses, led by a healthy recovery in rural areas and new product launches across both the utility vehicles and tractors segments. Given the sustained demand momentum in UVs and tractors, we have raised our earnings estimates by 4%/6% for FY26/FY27E.
We estimate M&M to post a CAGR of ~13%/13%/18% in revenue/Ebitda/PAT over FY25-27E.
While M&M has outperformed its own targets of earnings growth and RoE of 18% in each of FY24 and FY25, it remains committed to delivering 15-20% EPS growth and 18% ROE, ensuring sustained profitability and shareholder value.
Reiterate Buy with a target price of Rs 3,482 (based on FY27E SOTP).
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