How are energy investors positioned?
On Monday, Jefferies reiterated its Buy rating on Mahindra & Mahindra (NSE:MAHM) Ltd (MM:IN) (OTC: MAHMF) with a consistent price target of INR 4,075.00. The reaffirmation comes despite the stock’s recent 14% decline over the last ten days, which contrasts with a marginal 1% fall in the Nifty-50 index during the same period. The dip in Mahindra’s stock value is attributed to market concerns regarding Tesla (NASDAQ:TSLA)’s potential market entry into India and the status of Mahindra’s electric vehicle (EV) orders.
Addressing these concerns, Jefferies analysts believe that Tesla’s entry into the Indian market will have a limited near-term impact on Mahindra. They argue that the significant difference in the pricing of the two companies’ portfolios, coupled with an EV policy that only offers lower duty on a restricted volume of high-priced vehicles, mitigates the potential threat from Tesla to Mahindra’s business.
Moreover, Jefferies finds the 30,000 EV orders that Mahindra has secured to be a positive sign, highlighting that these orders account for 30% of the total projected EV sales in India for the calendar year 2024. The firm’s analysis suggests that Mahindra’s valuation is attractive, noting that the company’s stock is trading at 20 times its core FY26E price-to-earnings (PE) ratio. This valuation is deemed compelling given the forecasted 18% compound annual growth rate (CAGR) in earnings per share (EPS) from FY25 to FY27.
The endorsement of Mahindra’s stock by Jefferies underscores the firm’s confidence in the automaker’s future performance and its position in the evolving Indian EV market. Despite the recent stock price volatility and the looming competition from Tesla, Jefferies maintains a positive outlook on Mahindra’s growth prospects and financial health.
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