Motilal Oswal Initiates Coverage on Mahindra and Mahindra with a Target Price of Rs 3825

Mahindra and Mahindra: Maintaining a BUY Recommendation Amidst Macro Uncertainty

Motilal Oswal recently met with the management of Mahindra and Mahindra to gain a deeper understanding of the company's current business dynamics amidst macroeconomic uncertainty. According to the research report, the auto demand momentum is expected to remain intact for Mahindra and Mahindra over the forecast period of FY25-28E.

The report highlights three key factors that will drive the company's growth: the lined-up launches of two ICE variants following the recent launch of the XUV7XO and XEV 9S, the new platform launch of NU-IQ in CY27, and the two variant launches of LCVs in CY26. Additionally, despite concerns over potential weakness in tractor demand in FY27, the report suggests that Mahindra and Mahindra is well-positioned to minimize any such impact, given the resilience of this business segment in the past.

Moreover, the company's policy of hedging its raw material exposure will enable it to offset the impact of severe input cost pressure. The report estimates Mahindra and Mahindra to post a compound annual growth rate (CAGR) of 17% in revenue, 15% in EBITDA, and 18% in PAT over FY25-28.

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Key Recommendations

The report emphasizes the importance of focusing on the company's growth gems and unlocking value from time to time in some or all of these segments to create option value for shareholders. Therefore, Motilal Oswal maintains a BUY recommendation for Mahindra and Mahindra with a SoTP-based target price of INR3,825.