Buy Mahindra & Mahindra Ltd for Target Rs.4,450 by Choice Institutional Equities
New launches and capacity expansion to drive growth momentum:
M&M delivered a strong performance in Q4FY26, led by robust growth across auto and farm segments, supported by market share gains, successful new launches and improving profitability. SUV volumes grew 19.7% YoY to ~1.1 million units, with revenue market share rising to 25.3% (+260 bps) in FY26, reinforcing M&M leadership. Key growth drivers include strong demand for premium SUVs, favourable product mix and consistent success of new launches, such as XUV 7XO (~9.5k monthly billings). The EV portfolio is emerging as the key growth lever, achieving ~40% eSUV revenue market share in FY26, with ~55k units sold and PBIT turning positive, supported by improving scale and penetration (9.6% in Q4FY26).
Farm segment remains a steady growth Pillar:
Tractor volumes grew 36% YoY to ~526k units, with market share at 43.6% in Q4FY26. Growth was driven by favourable farm sentiment, strong rural demand, and product launches. FY26 Margin improved (PBIT 19.8%; core 20.8%) owing to operating leverage and cost discipline. The company expects the farm segment to grow in midsingle digits in FY27. Continued launches (19 planned) and supportive macros should sustain performance.
We expect growth momentum to continue, driven by SUVs, EV scale-up and capacity expansion. However, commodity inflation, rising competition, and likely monsoon-led tractor demand are the key risks.
View and Valuation: We marginally revise our FY27/FY28E EPS estimate and maintain our target price at INR 4,450, valuing the company at 25x (unchanged) on FY28E EPS, along with subsidiary valuation. We reiterate our ‘BUY’ rating on the stock, supported by M&M’s strategic focus on new launches, strong SUV demand, growing EV share and capacity expansion.
Q4FY26: Revenue in line, EBITDA margin Impacted
* Revenue was up 26.2% YoY and up 2.7% QoQ to INR 3,95,541 Mn (vs CIE est. at INR 3,82,102 Mn), led by 25.0% YoY growth in volume and 2.8% YoY growth in automotive ASP, while tractor ASP declined 3.1% YoY
* EBITDA was up 18.8% YoY and down 1.8% QoQ to INR 55,644 Mn (vs CIE est. at INR 55,726 Mn). EBITDA margin was down 87 bps YoY and down 65 bps QoQ to 14.1% (vs CIE est. at 14.6%)
* APAT was up 53.3% YoY and down 7.3% QoQ to INR 37,373 Mn (vs CIE est. at INR 36,282 Mn)
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