Can M&M maintain its growth momentum with new product launches?
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ET Intelligence Group: The stock of Mahindra & Mahindra (M&M) has gained 4% in the past four trading sessions after the company posted strong performance for the March quarter, outpacing the 1.6% gain in the BSE Auto index.The tractors-to-sports utility vehicles (SUV) maker gained market share and reported margin expansion across business segments. To address rising demand, the company plans to increase the capacity to 85,000 units per month by FY27. It has planned 17 new launches by 2030, which includes 5 battery electric vehicles (BEV). Analysts have reiterated 'buy' with an upside of 15-17% to Thursday's closing stock price of ₹3,031 on the BSE.The company's March quarter automobile sales grew by 17.5% to 2,53,028 vehicles and tractors grew by 22.7% to 87,138 units year-on-year. Sequentially, while automobiles rose by 3%, tractor sales slipped by 28% owing to seasonal factors.For FY25, Mahindra's SUV volume surpassed its tractor volume, increasing by 20% to 551,000 vehicles whereas tractor volume was up by 12% to 4,20,636 vehicles. The revenue market share of SUVs increased by 210 basis points to 22.5%, driven by Mahindra's XUV3XO and Thar Roxx. The company is in the process of increasing capacity for each of the models by 1,500 vehicles per month in FY26. For tractors, the market share rose by 170 bps and 43.3%.The management anticipates the farm segment to grow in mid-single digit for FY26, outpacing the industry growth.YES Securities expect market share gains will now be gradual for M&M in FY26, as the impact of new launches in the lightweight tractor category including OJA and Swaraj would normalise. "We have assumed the tractor industry to grow 5-7% while MM's FES volumes to grow 8% in FY26," the brokerage said in a report.In the medium term, apart from the slated capacity addition, the company plans to unveil a new platform on 15 August in Chakan, with an annual capacity of 1,20,000 units. Motilal Oswal Financial Services has raised earnings estimates for the company by 4-6% for FY26 and FY27, citing that it is well-placed to outperform across core businesses led by a recovery in rural areas and new product launches. It has reiterated 'buy' with a target price of ₹3,482.
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