Buy Mahindra & Mahindra Ltd For the Target Rs. 3,790 by Choice Broking Ltd
MM reported an inline performance, with strong SUV sales driven by a good festive season
* Standalone revenue for Q3FY25 stood at INR 3,05,382Mn, reflecting a 20.8% YoY and 10.8% QoQ growth (vs CEBPL estimates of INR 3,13,154Mn). Total volumes reached 3,67,273 units, driven by a 16.1% YoY increase in auto volumes, a 19.8% YoY rise in tractor volumes, and a 2.1% YoY growth in ASP.
* EBITDA for Q3FY25 was reported at INR 43,843Mn, (vs CEBPL est. INR 43,842Mn), up 35.5% YoY and 12.3% QoQ. EBITDA margin was up 156 bps YoY and 19bps QoQ to 14.4% (vs CEBPL est. at 14.0%).
* PAT for Q3FY25 reported at INR 29,643Mn, (vs CEBPL est. INR 31,782Mn), up 20.8% YoY and down 22.8% QoQ.
Market Share Gains and Capacity Expansion to Drive Growth to Meet Rising Demand:
MM expects the auto industry to grow over 15% in Q4, potentially leading to full-year growth of over 7%. Capitalizing on this momentum, the company reported a 16% YoY increase in auto volumes, with SUV market share expanding by 200 bps to 23% and LCV market share rising by 230 bps to 51.9%. Its new EV models are expected to generate a combined monthly sales volume of 5,000 units, with minimal concern over ICE cannibalization as both will be sold through the same retail network. The simultaneous EV launch has also created a positive multiplier effect, driving multiple bookings from some customers. To meet rising demand, MM is debottlenecking and expanding capacity for the 3XO and Roxx models, targeting an additional 1,500–2,000 units per model by June–July
View and Valuation:
We have marginally tweaked our FY26/27 EPS estimates by -3.2%/-5.2% % and roll over our forecasts forward to come up with a revised target price of INR 3,790; (valuing at 21x 27E EPS + Subsidiary Valuation), while maintaining our ‘BUY' rating. We retain our positive view on MM driven by its focus on scaling up the premium product portfolio and a strong boost to rural demand.
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