Financially strong auto stock to buy now for an upside of more than 50%; Do you own it?

The shares of one of India’s largest vehicle manufacturers which is part of the Mahindra Group, engaged in manufacturing vehicles, farm equipment, and financial services are in focus after several International Brokerage firms maintained a positive stance on the company.   

Share Price Movement

The shares of Mahindra & Mahindra Ltd, with a total market capitalization of Rs 3.37 Lakhs Crores on Monday, reached an Intraday high of Rs 2,716.8 per share gaining 1.8 percent in today’s trade. The shares closed at Rs 2710.5 per share which was 1.54 percent higher than the previous closing price of Rs 2,669.35. 

The shares of Mahindra & Mahindra Ltd generated strong returns of 40 percent in the past year, 231 percent returns in the past three years, and an impressive 419 percent return in the past 5 years respectively.

What Happened 

Three Global Brokerage Firms have maintained their “Buy” call on Mahindra & Mahindra Ltd’s stock implying their positive stance on the Automobile giant. The positive stance comes after the stock has seen a sharp correction over the last two weeks. The stock is currently trading at a discount of 17 percent from its 52 week high of Rs 3270.95. 

Bernstein has given an “Outperform” rating on the stock with a target price of Rs 3,650, implying a 36.7% upside from its previous close of Rs 2,669.35. The firm sees the recent stock correction as an investment opportunity and supports the company’s capital allocation policy. Bernstein believes Tesla’s potential India entry may not have a large impact in the medium term. 

Jefferies has a “Buy” rating on the stock with a target price of Rs 4,075, implying a 52.7% upside from the last close. It stated that M&M’s 30,000 EV orders are encouraging as it forms 30 percent of India’s total EV sales in 2024. Jefferies also finds M&M’s core P/E ratio of 20 times for FY2026 attractive, with an 18% estimated EPS CAGR for FY 2025-2027.

Goldman Sachs has a “Buy” rating with a target price of Rs 3,800, implying a 42.4% upside. The firm notes that the current stock price is at a 15% and 19% discount to the P/E multiples of the automotive segment for FY 2026 and 2027 compared to Maruti Suzuki. Additionally, the implied automotive P/E is trading at an 8% discount to the tractor business.

Also read: Green energy stock crashes 9% after shareholders lock-in period ends

Financials 

The company reported an increase of 18 percent YoY in revenues from operation from Rs 35,218 Crores in Q3FY24 Crores to Rs 41,465 Crores in Q3FY25.It posted an increase of 22 percent YoY in Net profits from Rs 2,977 Crores to Rs 3,624 Crores over the same period. On the operating level, their EBITDA grew by 28 percent YoY from Rs 6,980 Crores to Rs 8,949 Crores. 

Recent Updates

MMFSL and MLDL, part of the Mahindra Group, will raise funds through rights issues of up to Rs 3,000 crore and Rs 1,500 crore, respectively, with M&M Ltd participating fully. Additionally, Mahindra Group has partnered with Anduril Industries to co-develop advanced Autonomous Maritime Systems, AI-enabled CUAS technologies, and Command and Control software.

About Mahindra & Mahindra Ltd

Mahindra & Mahindra Ltd., part of the Mahindra Group, operates in over 100 countries with a workforce of 260,000. As the world’s largest tractor manufacturer by volume, it plays a key role in global agriculture. Additionally, it is India’s top SUV maker by revenue market share, highlighting its automotive industry influence.

Written By Adhvaitha Nayani

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