Global Brokerage Citi has maintained its "buy" stance on auto major Mahindra and Mahindra and increased its target price on strong monthly volume trends in the utility vehicles (UV) segment.
What Happened: The company in the monthly auto sales data for May sold 71,682 vehicles, increasing by 17% from the previous year. In the UV segment, the company sold 43,218 vehicles in the domestic market, rising by 31%. Total UV sales stood at 44,283 which includes exports.
Veejay Nakra, president of M&M’s Automotive Division, M&M said the company received strong response for the XUV 3XO model, which opened booking on May 15. He said the openings hit 50,000 mark in the first hour of booking.
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In terms of total tractor sales, the company sold 37,109 units increasing by 12.06% from the previous year.
Citi maintained "buy" call on the company and raised the target price to ₹3,010 as they tweaked up the UV estimates. The brokerage also changed the earnings estimate by 6-9% over FY25-27.
They reasoned the strong monthly volume trends, expanded volume capacity and strong initial volumes for XUV 3XO model. The expectations for a normal monsoon in the year could also result in upside risks on the tractor volume estimates, said the brokerage.
Price Action: Shares of Mahindra and Mahindra were down 2% at ₹2,581.40 on Tuesday morning.
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