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In Q2FY25, M&M delivered a decent set of performance on a yearly basis backed by healthy growth in both the segments. Revenue for the quarter grew by 12.9% on YoY basis to Rs.275.5bn (vs CEBPL est. of Rs.273.7bn). Automotive business grew by 14.7% YoY to Rs.211bn and FES segment grew by 9.8% YoY to Rs.65bn. Margin during the quarter came at 14.2% (excluding investments from JV& Subsidiary) (+190bps YoY/-71bps QoQ) led by RM cost. EBITDA grew by (30.5% YoY/-2.9% QoQ) to Rs.39bn (vs CEBPL est. of Rs.40.8bn) and APAT for the quarter stood at Rs.38.4bn (+13.2% YoY/+47.0% QoQ).

* The company continues to demonstrate solid market positioning within the SUV segment, underscored by a significant order backlog across high-demand models, which underscores strong consumer confidence and brand loyalty. XUV models have garnered robust booking numbers, fortifying the company's presence in an increasingly competitive SUV market. This momentum reflects strategic alignment with consumer demand trends and positions the brand favorably against peers.

* A commitment to innovation is evident in the company’s continual rollout of new features and advanced technology across its vehicle lineup. This proactive approach to enhancing user experience is expected to further differentiate the company in a competitive landscape, reinforcing customer retention while attracting a new demographic. Anticipated model launches and feature enhancements will likely sustain the brand's competitive edge and leadership within the automotive technology space.

* Furthermore, the company's balanced revenue mix across the Auto and Farm Equipment segments reflects financial stability, with both segments posting strong EBIT margins and growth. This diversification not only secures a stable revenue stream but also ensures capital is available for reinvestment into growth-driven areas, reinforcing a sustainable long-term outlook.

Outlook and Valuations: The company continues to see strong demand across its SUV portfolio, driven by continuous innovation and new model introductions. The commitment to product development and market expansion positions the company well for future growth. The auto revenue market share has increased to 21.9%, up nearly 2 percentage points from the previous year, highlighting the success of its expanding SUV offerings. Furthermore, the farm segment is also showing significant progress, with market share growing by nearly 1 percentage point, driven by strong rural sentiment. The balanced revenue mix across segments is expected to support sustained growth. We arrive at a BUY rating on the stock with a SOTP TP of Rs.3,466 (based on 24x Sep-FY27E Core EPS + subsidiary valuation).

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