Buy Mahindra & Mahindra Ltd For Target Rs. 3,965 By Choice Broking Ltd
Business Overview: Mahindra & Mahindra (MM) is a leading player in India's automotive and farm equipment sectors, with a strong presence in SUVs, tractors, and electric vehicles, supported by the launch of new EV models. The company benefits from strong brand equity, an extensive distribution network, and tech-driven mobility solutions. In FY25, MM reported revenue of INR 1,186Bn with an EBITDA margin of 15.5%. Revenue is expected to grow at a CAGR of 20.1% from FY25 to FY27, driven by sustained rural demand, an expanding EV portfolio, and global market expansion.
Can MM sustain its market share in MUV segment or emerge as the market leader?
MM has demonstrated impressive growth, with a CAGR of 37% from FY21 to FY25 in MUV sales, reaching 5,67,090 units. Its MUV market share has consistently increased, from 13.5% in FY21 to 18.0% in FY25 , indicating a strong upward trajectory. However, MSIL has outpaced with 36.2% CAGR in MUV sales, reaching 8,77,186 units in the same period. Additionally, MSIL market share has surged from 19.9% in FY21 to 27.8% in FY25 , significantly higher than MM’s. While MM is sustaining its market share growth, emerging as the market leader seems challenging given MSIL superior volume and market share expansion.
Is MM’s farm equipment market share growing, and can it maintain its leadership?
MM has steadily increased its market share from 38.2% in FY21 to 43.3% in FY25, showcasing consistent growth. With its closest competitor, Sonalika International, holding less than 15% market share, M&M faces no immediate threat to its leadership. The widening gap indicates MM’s dominance in the sector is only strengthening, supported by its strong product portfolio and market reach. MM’s revenue share from the Farm Equipment segment (FEM) stands at 25%, ensuring a stable contribution to its overall revenue.
Will MM’s new EV launches significantly impact its overall passenger vehicle sales?
In FY25, EVs comprised just 1.5% of M&M’s total SUV volumes (8,392 out of 5,51,487 units). However, with the launch of the BE 6E and XU 9E, monthly EV sales are projected to increase to 2,500–4,000 units. This would lift EV penetration to 4–7% of total SUV volumes by FY27, reflecting a significant push toward electrification, particularly in the premium segment. While this positions MM for long-term growth in the EV space, China’s recent ban on Rare Earth Magnet exports poses a risk to production schedules and cost structures, potentially delaying model launches.
Impact of China’s Rare Earth Magnet Ban on MM?
China’s recent export restrictions on rare earth magnets have raised near-term risks for MM. These magnets are critical for EV motors, and with China controlling over 90% of global supply, MM is facing potential production delays and cost pressures. While the company currently holds adequate inventory, the import process has slowed due to stricter end-use certifications and bilateral clearances. If the restrictions persist beyond August 2025, EV production could be impacted, potentially delaying model launches and increasing costs by up to 8%. In response, MM is pursuing short-term de-risking measures such as importing assembled components and sourcing from alternate geographies. It is also working with industry bodies and the government to ease import constraints. In the long term, efforts are focused on diversifying supply chains, increasing rare earth recycling, and investing in domestic processing. While the situation presents a headwind, MM’s proactive approach may partially offset the disruption.
What makes MM a standout investment in India's automobile industry?
MM has strengthened its position in the Indian auto industry with consistent market share gains across key segments. As of Q4FY25, the company has expanded its SUV market share to 18.3% in, capitalizing on the rising demand for utility vehicles. In the commercial segment, MM leads with a 45% market share in LCVs, reinforcing its dominance in freight and logistics.
Additionally, MM’s tractor market share has reached to 41.2% in Q4FY25, highlighting its stronghold in the rural and agricultural sector. With a well-diversified portfolio across high-growth categories, MM is well-positioned to sustain its growth momentum and capitalize on evolving consumer preferences.
Recommendation: We maintain a positive outlook on MM, maintaining our ‘BUY’ rating, with a TP of INR 3,965.
Key Risks:
* Competition risk – Increasing competition from EV manufacturers, tech-driven mobility startups, and global automakers intensifies pricing pressure and the need for continuous innovation.
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