As M&M Shares Trade Red After Q1 Results Miss, Here's Why Brokerages Are Still Bullish

Brokerages maintained their bullish stance on Mahindra and Mahindra after the company posted an uptick in margin and business outlook in its June quarter results. M&M‘s shares were in the red on Thursday morning.

What Happened: M&M reported a 5.31% year-on-year fall in net profit to ₹2,612.63 crore in the June quarter. Its revenue was up 12% to ₹27,038.79 crore. EBITDA rose 22% to ₹4,023 crore while EBITDA margin gained 120 basis point to 14.9%. The net profit and sales missed estimates while EBITDA exceeded expectations. 

The company clawed back the leadership in sports utility vehicle (SUV) revenue market share at 21.6% and top position in the tractor market with a share of 44.7%.

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Brokerage Views: Nuvama maintained "buy" and hiked the target price to ₹3,800. The brokerage estimates a revenue and earning compound annual growth rate of 17% and 20% over FY24-27.

The research firm sees a recovery in the farm segment due to abundant monsoons, favourable government policies and better trade terms for farmers. The automotive segment has robust revenue visibility on the back of a 1.78 lakh utility-vehicle order book and a healthy FY25 launch pipeline, which includes five-door Thar and dedicated platform electric vehicles, the brokerage added. 

JP Morgan also maintained an "overweight" stance and increased the target price to ₹3,210. The firm said there is a healthy operating outlook for both farm and auto businesses. The research firm increased its auto and farm margins but reduced average selling prices considerably. 

BofA also retained a "buy" call and raised the target price to ₹3,400. The brokerage said there was a margin surprise in Q1 but demand softness in SUV weighted in. The research firm is positive on the firm’s farm business outlook. It sees M&M as a compounder with strong execution on share gains and margin delivery. 

Price Action: Shares of M&M were down 0.78% to ₹2,885.15 on Thursday morning.

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