Mahindra & Mahindra shares could rise up to 22%, brokers say after second-quarter results. Should you buy, sell or hold?

Mahindra & Mahindra (M&M) shares could rise as much as 22%, according to global brokers who turned increasingly bullish following the automaker’s September quarter results. Nomura and Nuvama both reiterated their ‘Buy’ ratings on the stock, citing robust demand for SUVs, strong growth in farm equipment and expanding profit margins as key drivers for the company’s next phase of growth.Nomura raised its target price for M&M from Rs 4,066 to Rs 4,355, implying a potential upside of 21.6% from Tuesday’s closing level of Rs 3,581.55 on the BSE. Nuvama maintained its buy call with a target price of Rs 4,200, suggesting an upside of almost 17%.

Nomura remains optimistic about the growth momentum

Nomura called M&M its “top pick” in the automotive sector in its post-results note, and expects “industry-leading growth to continue” over the next three years. The brokerage expects SUV volume growth of 18%, 11% and 7% over FY26-28, supported by upcoming launches of battery-electric, hybrid and internal combustion engine models. The broker highlighted that the automaker’s Production-Linked Incentive (PLI) approval for battery-electric vehicles provides a “key strategic advantage over peers.” Tractor volume growth estimates were also increased to 12% and 5% for FY26 and FY27 respectively. Nomura sees EBITDA margins rising to 14.4%–15.3% in 26-28, while EV margins will reach double digits in 28 years as the entire portfolio falls under the PLI benefit.

Nuvama sees continued earnings momentum

Nuvama reiterated similar optimism, expecting M&M to achieve a CAGR of 15% and 19% in revenue and profit, respectively, over FY25-28. “Auto segment CAGR is expected to be 15% (FY25-28) on the back of robust demand and new launches, and agriculture segment CAGR of 13%, driven by market share gains and supportive policies,” the brokerage said. It added that the company’s return on capital employed (RoIC) is likely to remain above 60%, supported by steady margins in both its auto and agricultural divisions. Nuvama values ​​M&M at 25x September 27 core EPS and allocates Rs 942 per share to subsidiaries and investments, maintaining a Buy rating.

Solid foundations in all segments

M&M reported a 28% year-on-year increase in consolidated profit after tax to Rs 3,673 crore for the July-September quarter, while revenue from operations rose 21.7% to Rs 45,885 crore.The automaker continued to dominate key segments, with a 25.7% share in SUVs, 53.2% in light commercial vehicles, 43% in tractors and 42.3% in electric three-wheelers. The company’s annual return on equity was 19.4%.

The auto segment reported total quarterly volumes of 2,62,000 units, up 13% year-on-year, with standalone PBIT rising 14% to Rs 2,281 crore. In the Farm segment, PBIT rose 48% to Rs 1,684 crore, with margins improving 220 basis points to 19.7%.

Mahindra Finance, the group’s financial arm, posted a 45% increase in profit after tax, while Tech Mahindra’s EBIT margin grew by 250 basis points to 12.1%, contributing to a resilient consolidated performance across the Mahindra Group.

With Nomura and Nuvama both forecasting continued growth, margin expansion and steady market share gains, Mahindra & Mahindra remains firmly on the radar of long-term investors. The stock’s recent momentum, coupled with a potential upside of 17-22%, indicates that M&M’s growth engine powered by SUVs, EVs and tractors may still have quite a few miles to go.

Also read | M&M Q2 results: PAT up 28% YoY to Rs 3,673 crore, revenue up 22%

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of the Economic Times)