ICICI Securities Initiates Buy Recommendation on Mahindra and Mahindra, Targets Price of Rs 4000

Mahindra & Mahindra's Earnings Fall Short of Expectations in Latest Quarter

Mahindra & Mahindra (M&M) reported an earnings before interest, taxes, depreciation, amortization, and merger (EBITDAM) of 14.1% in its latest quarter, which was slightly below the expectations of ICICI Securities. The research firm had anticipated a stronger performance from the auto sector, but M&M's farm earnings fell short of expectations. However, the impact of commodity inflation and an adverse mix was partially offset by higher operating leverage.

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M&M's outlook for the auto segment remains positive, driven by its robust UV portfolio and recent launches. However, the company is expected to face challenges from rising commodity inflation. The research firm has retained a BUY rating for the company, with a stock price target of INR 4,000 based on a sum-of-the-parts (SoTP) valuation approach. This represents an upside of INR 50 from the current stock price of INR 3,950, implying a multiple of 24 times the company's core earnings per share (EPS) for fiscal year 2028.

In terms of volume growth, M&M has guided for mid-to-high teen growth in its utility vehicle (UV) segment for fiscal year 2027. However, the growth in the domestic tractor segment is expected to moderate due to a high base in the previous year. M&M has guided for mid-single-digit growth in this segment for fiscal year 2027.