M&M shares surge to new record high despite weak market. Should you buy?
Premium- Brokerage PhillipCapital has upgraded M&M shares' rating to Buy
Shares of Mahindra & Mahindra (M&M) continued to surge with the stock hitting a fresh record high of ₹1,033 apiece on the BSE in Tuesday's early deals even as benchmark Sensex slipped more than 300 points.
The automaker reported a five-fold jump in standalone profit at ₹1,192 crore for its fourth quarter that ended March 31, 2022. The Mahindra Group company's revenue grew 28% to ₹17,124 crore in the period under review as compared with ₹13,356 crore in March quarter 2020-21.
“While the outlook for Tractors has improved, we expect the Auto business to be the key growth driver over the next couple of years.Valuations are still at a substantial discount to its five-year average, reflecting weakness in the Tractor cycle," said Motilal Oswal in a note.
The brokerage house has maintained its Buy tag on M&M shares with a target price of ₹1,150 apiece. The auto stock has risen about 10% in the last five trading sessions.
Analysts at PhillipCapital have upgraded the stock's rating to Buy and value the stock at ₹1,140 as FES subs reported positive PBIT for 7 consecutive quarters, and also the company was able to recover lost market share in Farm segment for FY22 to 40% levels.
“The auto business is doing well on the back of new launches and better margins. Auto profitability has also improved owing to new launches, structural cost savings and better variant mix despite drag from MHCV business. Incrementally, anticipated cooling of RM prices and higher operating leverage (new launches and supply issues easing), should improve margins for both Farm and Auto businesses," the note added.
Meanwhile, the homegrown auto major on Monday said it is planning to launch the fully electric version of its XUV 300 SUV in the first quarter of the next year.
The company also announced that it will unveil its electric vehicle business strategy, 'Born Electric Vision' of EV concept in August this year. The company plans to roll out 13 SUVs by 2027 with eight of them to be electric SUVs.
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The Mumbai-headquartered company has recently partnered with Volkswagen to explore the use of the latter's modular electric drive matrix (MEB) components that can be used in its electric cars.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.