M&M Share Price up by 7% Post Q4 Results, Analysts Elevate Targets

Tanushree Jaiswal Tanushree Jaiswal

Last Updated: 17th May 2024 - 04:42 pm

Listen icon

Stock price of Mahindra & Mahindra rallied by over 7% in early trade on Friday reaching a record high of ₹2,554.75 per share on the BSE. This surge followed the company’s Q4 results for FY24 and bullish analyst reviews which included raised target prices.

Q4 Performance Highlights

Net Profit Growth: M&M reported a 31.6% YoY increase in net profit reaching ₹2,038.21 crore compared to ₹1,548.97 crore in the same quarter last year.

Revenue Increase: Revenue from operations rose by 11.24% YoY to ₹25,108.97 crore from ₹22,571.37 crore.

Automobile Segment: Volumes in M&M’s automobile segment increased by 14% YoY, totaling 215,280 units.

Tractor Sales: There was a 20% YoY decline in tractor sales with 71,039 units sold.

Analyst Perspectives

Nuvama Institutional Equities

 

Revenue and Launch Pipeline: The firm emphasized the robust revenue visibility in the auto segment supported by a large UV order book of 220,000 units and a strong launch pipeline for FY25 including the Thar five door and dedicated platform EVs.

Farm Segment Recovery: Recovery in the farm segment is expected due to favorable monsoon forecasts, supportive government policies and positive trade terms for farmers.

Earnings Forecast: Nuvama raised its FY25E and FY26E EPS estimates by 8% and 13%, respectively forecasting a revenue and core earnings CAGR of 14% and 17% over FY24–26E.

Target Price: The firm retained its buy rating and increased the target price to ₹2,760 per share from ₹2,380.

Motilal Oswal Financial Services

Q4 Performance: M&M’s Q4 performance exceeded Motilal Oswal’s estimates across all metrics.

Earnings Growth: EPS estimates were increased by 6% for FY25 and 11% for FY26. The firm projects a CAGR of approximately 17%, 20% and 16% in revenue, EBITDA and PAT over FY24-26.

RoE and Capex: M&M achieved an RoE of 18% in FY24 and aims to maintain this in the long term with a capex increase to ₹370 billion for FY25-27.

Valuation: Core P/E for M&M stands at 24x and 19x FY25E and FY26E EPS considered attractive compared to peers.

Target Price: Motilal Oswal maintained its buy rating and raised the target price to ₹2,720

Emkay Global Financial Services

Revenue Growth and Margins: M&M posted an 11% YoY revenue growth with stable QoQ margins at 12.9%. The margin beat was driven by strong tractor EBIT margins.

Demand Outlook: Strong double digit growth in SUVs due to new launches and a potential uptick in tractors are expected.

Earnings Estimate: Emkay upgraded FY25E and FY26E EPS estimates by 8% each predicting a 9% core EPS CAGR over FY24-26E.

Target Price: The firm retained its add call and raised the target price to ₹2,550 from ₹2,100.

Kotak Institutional Equities:

Automotive Demand: Healthy demand trends in the automotive division with an expected recovery in tractor volumes from 2QFY25E.

Execution and Position: M&M’s execution has been strong, maintaining leadership in key segments, improving return ratios and being well prepared for the EV transition.

Earnings Estimate: Kotak increased FY2025-FY26E EPS estimates by 12-14% based on higher volumes and EBITDA margins.

Target Price: The firm retained its add rating and raised the target price to ₹2,550 from ₹1,800, considering higher volume and margin assumptions and a roll forward to June 2026E.

Final Words

M&M's impressive Q4 results and the optimistic outlook from multiple brokerage firms have driven its share price to new heights reinforcing its strong market position and future growth potential.

How do you rate this article?

Characters remaining (1500)

Disclaimer: Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

Get 100 trades FREE* with the code "FREEPACK"
+91
''
Resend OTP
''
''
Please Enter OTP
''
By proceeding, you agree T&C*
Mobile No. belongs to

Indian Market Related Articles

GP Eco Solutions IPO Subscript...

by Tanushree Jaiswal 14th Jun 2024

SEBI Moves to Limit PE Funds' ...

by Tanushree Jaiswal 14th Jun 2024

Hyundai India Prepares IPO DRH...

by Tanushree Jaiswal 14th Jun 2024

M&M Overtakes Tata Motors Brie...

by Tanushree Jaiswal 14th Jun 2024

Tata Group Aims for Vivo India...

by Tanushree Jaiswal 14th Jun 2024

Want to Use 5paisa
Trading App?