On Thursday, UBS updated its assessment of Mahindra & Mahindra Ltd (MM:IN) (OTC: MAHMF), increasing the price target to INR 3,320.00 from INR 3,170.00 while maintaining a Neutral rating on the stock.
The adjustment follows Mahindra & Mahindra's performance, which saw the company's standalone EBITDA surpassing UBS and consensus estimates by 10% and 5%, respectively. This was attributed to robust average selling prices and margins in both the Automotive and Farm Equipment Sectors (FES).
The company has continued to gain market share, with SUVs, tractors, and light commercial vehicles (LCVs) seeing year-over-year increases of 190, 90, and 260 basis points, respectively. Mahindra & Mahindra's management has raised its tractor industry volume guidance for FY25 to 6-7% from the previous 5%, indicating an expectation for strong second-half growth of 13-15%, after a flat first half.
In the SUV segment, management highlighted a robust festive season and strong demand for models such as the Thar Roxx, XUV700, and XUV3XO, maintaining mid to high teen volume growth projections for FY25. The company anticipates continued robust growth in rural areas while expecting some moderation in urban demand.
For LCVs, Mahindra & Mahindra's market share has surpassed 50%, and management is optimistic about a rebound in industry demand during the second half of the year. Although UBS remains positive on the business prospects of Mahindra & Mahindra, the firm recently downgraded the stock to Neutral from Buy, citing limited upside potential.
InvestingPro Insights
Mahindra & Mahindra's strong performance, as highlighted in UBS's analysis, is further supported by data from InvestingPro. The company's revenue growth of 12.78% over the last twelve months and a robust EBITDA growth of 19.9% in the same period underscore its solid financial position. This aligns with the company's market share gains in SUVs, tractors, and LCVs mentioned in the article.
InvestingPro Tips reveal that Mahindra & Mahindra is a prominent player in the Automobiles industry, which is evident from its market leadership in various segments. The company's ability to maintain dividend payments for 24 consecutive years, with increases for the past 4 years, demonstrates its financial stability and commitment to shareholder returns. This is particularly noteworthy given the company's optimistic outlook for tractor and SUV sales growth.
The stock's impressive performance is reflected in its high return over the last year, with a one-year price total return of 95.39%. This substantial gain aligns with the company's strong market position and improved financial metrics discussed in the UBS report. Investors seeking more comprehensive insights can access 9 additional InvestingPro Tips for Mahindra & Mahindra, offering a deeper understanding of the company's financial health and market position.
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