June 22, 2024

Motilal Oswal’s analysis report on Mahindra and Mahindra

We have now categorized Mahindra and Mahindra (MM)’s core companies into three buckets: Tractor, Pickup UV, and Passenger UV. All of those companies witnessed a pointy progress of their underlying industries, leading to record-high volumes in FY23. Whereas the trade dynamics remained favorable for MM, its focus on- i) new mannequin launches, ii) wholesome margin enlargement within the core enterprise, and iii) prudent capital allocation resulted in an earnings CAGR of ~11% over FY19-23. This coupled with anticipated launches within the EV class led a considerable re-rating. In consequence, MM has outperformed the Nifty index considerably over the past two years with ~44% CAGR visà-vis 12% for the Nifty. Whereas we consider that progress ought to reasonable in a few of its verticals, MM continues to be higher positioned to outperform the underlying segments, which might end in ~12.5%/15%/17% income/EBITDA/ PAT CAGR over FY23-26E.

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Outlook

The implied core P/E for MM stands at 18.1x/16.4x FY24E/FY25E EPS, which stays enticing vs. friends. Therefore, we reiterate our BUY ranking with a TP of INR2,005 primarily based on Dec’25E SOTP and INR214/share for its ePV subsidiary.

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Mahindra & Mahindra – 03 – 01 – 2024 – moti