Buy Mahindra and Mahindra; target of Rs 3800: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • M&M's auto segment is expected to continue its healthy performance, supported by strong traction for its models, capacity addition, and new launches.
  • The company plans to increase its capacity from 68k units per month to 132k units per month by FY31, which will support growth opportunities.
  • M&M's BEV business is growing strongly, with the XEV 9S seeing high demand and waiting periods.
  • Rising commodity costs are expected to remain a near-term headwind, but management expects these to ease during FY28.

Thesis Validation Checklist

  • Investors should watch for the success of M&M's new launches, particularly in the UV portfolio, and the company's ability to increase capacity and reduce waiting periods.
  • The response to upcoming launches, including the XEV 9S, will be crucial in determining the company's growth trajectory.
  • M&M's ability to manage raw material inflation and maintain its pricing power will be important in sustaining margins.
  • The company's tractor business is expected to see muted traction due to rainfall deficit and drought conditions in key regions, but a recovery in the tractor market could be a positive catalyst.