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UBS raises Mahindra & Mahindra stock rating to Buy, cuts target

Published 05/03/2025, 06:54
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MAHM
-0.32%

On Wednesday, UBS analyst Pramod Kumar upgraded Mahindra & Mahindra (NSE:MAHM) Ltd (MM:IN) (OTC: MAHMF) stock rating from Neutral to Buy, adjusting the price target to INR3,300.00 from a previous INR3,460.00. Kumar’s assessment indicates confidence in the company’s growth potential despite a general industry slowdown, projecting a 9% volume growth for M&M by FY26. This growth is anticipated to be driven by the strong demand for its Sport Utility Vehicles (SUVs) and the introduction of Electric Vehicles (EVs).

The upgrade comes after Mahindra & Mahindra’s recent EV launch garnered 30,000 bookings, a figure that, while below initial estimates, is considered substantial in the context of India’s current EV market. January 2025 saw EV volumes in India reach 12,000 units, with the calendar year 2024 totaling 98,000 units. UBS expects Mahindra & Mahindra to continue expanding its SUV offerings in the coming fiscal year.

In addition to the automotive sector, Mahindra & Mahindra’s Farm Equipment Sector (FES) is experiencing robust demand and is not facing immediate threats from technology or regulatory disruptions. The FES contributes significantly to the company’s EBITDA and Sum of the Parts (SoTP), accounting for 40% and 30% respectively.

UBS’s analysis suggests that the 19% decline in Mahindra & Mahindra’s share price over the past month, compared to the 13% correction of the Nifty Auto index, is an overreaction to the news flow surrounding EVs. The firm underlines that domestic SUVs, which are estimated to account for approximately 50% of the company’s EBIT, offer a strong financial basis for the company.

The UBS analyst concluded that the recent price correction presents a favorable risk/reward scenario for investors, leading to the upgrade of the stock to a Buy rating. The new price target reflects an adjustment in line with the firm’s current valuation and market conditions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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