M&M shares touch record high after healthy March quarter results - brokerages see up to 20% upside in auto stock

Auto major Mahindra and Mahindra (M&M) shares hit a record high of Rs 1011.5 per share after surging by over 6 per cent on the BSE intraday trade on Monday. The company on Saturday reported slightly above estimated earnings in the fourth quarter of the financial year 2021-22 (Q4FY22). 

M&M’s consolidated PAT (Profit After Tax) after EI grew by 48 per cent to Rs 2,237 crore in Q4FY22 as compared to Rs 1513 crore, the company said in a regulatory filing on Saturday. Similarly, its consolidated revenue stood at Rs 1990 crore in the March quarter, up 21 per cent year-on-year. 

M&M saw pressure on margins sequentially and this was mainly due to gross margin compression amidst continued raw material pressures, domestic brokerage ICICI Securities said while maintaining a Buy rating with a target price of Rs 1006 per share (upside of 6 per cent). 

The success of the new launches coupled with production ramp-up as the chip-supply situation eases, to drive market share gains in the core SUV segment with Scorpio Refresh to further aid demand momentum, the brokerage said. 

Management remains focussed on creating a diversified EV portfolio with 17 new products (FY24 onwards) including LCVs/3Ws other than SUVs and the company is also open to value unlocking in the EV space by getting a strategic partner to invest, ICIC Securities said in its report. 

Global brokerage firm Morgan Stanley sees upside risks to forecasts for tractor volume, a key stock driver for M&M. It said SUV business turnaround and relatively cheap multiples keep the brokerage to maintain an Overweight stance with a target price of Rs 1145 per share (20 per cent upside). 

The stock at around 10:12 AM was trading 2 per cent higher to Rs 972.3 per share on the BSE as compared to a 1.68 per cent rise in the S&P BSE Sensex during the same period.