M&M shares hit 52-week high on strong Q4; here's what analysts say

Shares of Mahindra & Mahindra surged as much as 7.6% to hit a 52-week high of ₹2,554.75, apiece on the BSE, after the company reported a consolidated net profit of ₹2,754 crore in the January to March quarter, up 4%, as against ₹2,637 crore in the corresponding period of the previous fiscal year, driven by auto major’s strong SUV (sports utility vehicle) portfolio.

The scrip opened higher at ₹2,427.85, up 2.3%, as against the previous closing price of ₹2,427,85. At 11:59 am, the share price of the auto major was trading 6.35% higher at ₹2,523.60. This was in line with the broader BSE Sensex, which was trading 281.98 points or 0.38% higher at 73,967.69. Mahindra & Mahindra’s market capitalisation stood at ₹3,12,723.67 crore, with more than 2.64 lakh shares exchanging hands on the BSE, against the two-week average of 1.19 lakh shares. The company hit a 52-week low of ₹1,238 on May 19 last year.

In the past month, three months and one year, the counter has surged 24.42%, 37.65% and 100.01%, respectively. In the year-to-date period, the counter has surged 48.32%.

In the January to March quarter of FY24, the revenue from operations of the manufacturer of XUV700 and Scorpio surged by 9% at ₹35,452 crore against ₹32,456 crore in the corresponding period of FY23.

Notably, Mahindra & Mahindra has earmarked a capital expenditure of ₹37,000 crore in the next three years. Of this, the country’s largest SUV manufacturer plans to invest ₹12,000 crore in its electric vehicle unit Mahindra Electric Automobile Limited (MEAL) portfolio. The company plans to drive its first electric vehicle by the first half of 2025. Meanwhile,  Mahindra & Mahindra has planned an investment of ₹14,000 crore in its ICE (internal combustion engine) portfolio. An investment of ₹5,000 crore has been made for the company’s farm business over the next 3 years.

Following Q4 results, most brokerages have revised the automaker's target price. Nuvama Institutional Equities noted that revenue visibility in the automotive segment remains strong, buoyed by a substantial UV order book of 220,000 units and a promising launch schedule for FY25, which includes the Thar five-door and dedicated platform EVs. Additionally, the farm segment is expected to recover due to abundant monsoons, supportive government policies, and favourable trade conditions for farmers. Consequently, the brokerage has increased its FY25E and FY26E earnings per share (EPS) estimates by 8% and 13%, respectively. As a result of these adjustments, they project a compound annual growth rate (CAGR) for revenue and core earnings at 14% and 17% over FY24–26E. The brokerage firm has raised the target price from ₹2,760 per share from ₹2,380 per share earlier.

Meanwhile, Motilal Oswal, while maintaining the BUY rating, has raised the target price to ₹2,720 apiece.

According to brokerage firm Emkay Global, the demand outlook for both key business areas is positive, with strong double-digit growth in SUVs due to new launches and a potential increase in tractor sales. Maintaining an ‘ADD’ call, the brokerage firm has revised the target price to ₹2,552 apiece from ₹2,100 earlier.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)