CLSA has reiterated its “outperform” rating on Mahindra & Mahindra (M&M) with a target price of ₹3,440, implying a potential upside of 20.9% from the current market price of ₹2,846.95. The brokerage highlighted several growth opportunities for the company in the domestic passenger vehicle (PV) and electric vehicle (EV) segments.
Key Highlights:
- SUV Focus: Over the past five years, M&M has shifted its domestic PV mix from 35% to 55% SUVs, with future growth expected from premium and mid-level SUVs.
- EV Expansion: M&M anticipates a significant increase in EV SUV sales in the next two years, reflecting its strong push toward sustainable mobility solutions.
- Consumer Preferences: Buyers are willing to pay a 10% premium for enhanced features in PVs, moving beyond a mileage-focused mindset.
- Urban Slowdown: A slowdown in discretionary spending in urban markets is evident after three strong fiscal years up to FY24.
- CAFE Norms: With Corporate Average Fuel Efficiency (CAFE) norms set to become stricter, M&M is prepared with a portfolio that aligns with these regulatory changes.
- ICE Models Advantage: Internal combustion engine (ICE) models benefit from lower GST rates, with consumers ready to pay a slight premium for these vehicles.
Outlook:
M&M is confident about driving growth through new model launches and capitalizing on its evolving SUV portfolio. CLSA believes this, combined with strong EV ambitions, positions M&M well for growth in FY25-26.
Disclaimer: This article is for informational purposes only. Please consult a financial advisor before making any investment decisions.
