Buy Mahindra & Mahindra Ltd for the Target Rs.4,450 by Choice Institutional Equities
Business overview:
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. MM benefits from its strong brand equity, an extensive distribution network and tech-driven mobility solutions. In Q4FY26, MM reported revenue of INR 395.5 Bn with an EBITDA margin of 14.1%. Revenue is expected to expand at a CAGR of 15.4% over FY26–29E, supported by a growing SUV segment, an expanding EV portfolio and sustained rural demand.
Could MM sustain its growth and emerge as an MUV segment leader?
MM has demonstrated impressive growth, with a CAGR of 31.1%, from FY22 to FY26 in MUV sales, reaching 6,60,276 units. Its MUV market share moved from 15.0% in FY22 to 21.3% in FY26, indicating a strong upward trajectory. MSIL is the leader with a market share of 24.5% in FY26, while it improved from 19.5% in FY22. MSIL expanded with a 27.2% CAGR in MUV sales, reaching 7,60,987 units in the same period. While MM is sustaining its growth, we believe it will be a challenge to emerge as the leader in the SUV space in the near-term, given MSIL’s superior volume and new model launches
How is MM positioned in the farm equipment segment and the outlook for the segment, going forward?
MM has steadily increased its market share, from 38.2% in FY21 to 43.6% in FY26, showcasing consistent growth. With its closest competitor, Sonalika International, holding less than 15% market share, MM faces no immediate threat to its leadership. This widening gap indicates MM’s dominance is strengthening, supported by its strong product portfolio and market reach. The farm equipment segment delivered a strong performance in Q4FY26, driven primarily by robust domestic demand. Farm volume grew 36.1% during the quarter. Looking ahead, while FY27E will face a high base effect, we remain cautiously optimistic and believe the tractor industry could expand at around 5% CAGR, supported by multiple structural enablers and robust rural and agricultural government spending
Will MM’s EV launches significantly improve its overall passenger vehicle sales?
In FY25, EVs accounted for 1.5% of M&M’s SUV volumes. However, with the launch of the BE 6 and XEV 9e, monthly EV sales have increased to ~5000–6,000 units. This has lifted the EV penetration to 9–10% of SUV volumes as compared to industry penetration of ~5%, reflecting a significant push towards electrification, particularly in the premium segment. This positions MM for long-term growth in the EV space, which is growing faster than ICE
What makes MM a standout investment in India's automobile industry?
MM has strengthened its position in India’s auto industry with consistent market share gains in key segments. As of FY26, the company has expanded its MUV market share to 21.3%, capitalising on the rising demand for utility vehicles. In the commercial vehicle segment, MM leads with a 45.2% market share in the LCV segment for FY26. Additionally, MM’s tractor market share has reached 43.6% in FY26, highlighting its stronghold in rural as well as agricultural sectors. With a well-diversified portfolio across high-growth categories, MM is well-positioned to sustain its growth momentum and capitalise on evolving consumer preferences.
Recommendation: We maintain a positive outlook on MM, maintaining our ‘BUY’ rating, with a TP of INR 4,450.
Key Risks:
* Competition risk: Increased competition in the EV and SUV segments, tech-driven mobility startups and global automakers intensifies pricing pressure and the need for continuous innovation.
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SEBI Registration no.: INZ 000160131
