Whalesbook
ICICI Securities noted that Mahindra & Mahindra's (M&M) reported profit margin (EBITDAM) of 14.1% missed expectations. This was due to rising commodity costs and a less favorable product mix, although better operating leverage helped offset some of this. The auto segment’s profit margin was slightly better than forecast, but the farm equipment segment’s margin fell slightly short.
Vehicle Demand and Growth Forecasts
Looking ahead, M&M expects mid-to-high teen volume growth for its utility vehicle (UV) segment in FY27, driven by strong demand. However, growth in the domestic tractor segment is projected to slow. The company forecasts mid-single-digit growth for this segment in FY27, following a high volume base from prior periods.
Analyst View and Price Target
The brokerage firm reiterated its 'Buy' recommendation for M&M. The target price was increased to ₹4,000 from ₹3,950. This valuation is based on a sum-of-its-parts (SoTP) method, setting the price at 24 times the company’s estimated earnings per share (EPS) for FY28 for its core operations. Rising commodity inflation remains a key factor to watch. The firm believes M&M's strong UV lineup and recent product launches will drive continued performance in the auto segment.