Checkout Budget Highlights 2023Prabhudas Lilladher's research report on Mahindra and Mahindra
We trim our FY24/25E EBITDA margin estimate by 50/80bps, as we see increase in contribution from EVs and lower margin automotive segment. MM reported 3QFY23 EBI TDA margin at 13% (+110bps QoQ), slightly above our estimate of 12.7%, driven by operating leverage. MM has a healthy ~266k units automotive order book and aims to ramp up capacity. MM revised its FY23 growth guidance for tractor industry to 10%+ (vs high-single digit earlier). Furthermore, MM aims to grow its farm machinery revenue 10x by 2027. At the analyst meet, MM unveiled concept EV based on all new born electric platform, XUV EV and BE EV range and looked impressive (design wise). MM remains one of our preferred picks, given (1) growing preference for SUV, (2) capacity ramp-up to fulfill strong order book, (3) leadership position in tractor industry, and (4) increased focus on EV space across segments (e3W, ePV, etc).
Outlook
We believe that RM tailwinds, operating leverage and end of volume of introductory priced model would benefit margins (we build-in c200bps increase over FY23-25E). Retain ‘BUY’ with unchanged TP of Rs 1,560 (18x on Dec-24E core EPS and Rs 307 for subs) as we also roll forward by one quarter.
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