M&M Violations industry with 10.5% Q1 growth, wins market share between segments, says Siddhartha Khemka

The tractor industry of India achieved a healthy growth of 9.2% JoJ in Q1FY26, with 2.86 Lakh units, driven by a robust demand in the categories with a high pure (HP) and pre-seasle stock prior to the Kharif seed period.

Favorable Rabi Harvest income and a steady demand from important agricultural states supports the strong start of the tax year.

The 41-50 hp segment remained the growth motor of the industry, which expanded 13.5% yo -y and orders 65.2% of the total volumes – an increase of 47.3% in FY19 – with a 8.4% CAGR compared to FY19-25.

The Sub -30 hp category grew by 21.3% JOJ, supported by the adoption and requirement of the horticulture of small farmers, while the reach of 31-40 hp rose 4.2% yo -y, which continued the decline in the CAGR decrease of -3% since FY19.

This underlines a structural shift in the long term to higher HP tractors, tailored to the needs of advanced mechanization.

Regionally West and North India together accounted for 72.6% of Q1 volumes. West -India has emerged when the dominant market, the share climbs from 28.9% in FY19 to 38.6% in Q1FY26, helped by sharing demand growth. The share of the India, however, has fallen from 19% to 13.7% in the same period despite a 21.9% YOY Rebound in the last quarter. East India also placed a sharp recovery of 27.6% of a low base, with a share of 13.8%. However, the players in the industry continue to be vigilant for the performance of the monsoon and liquidity in the countryside, in addition to the pace of recovery in weaker geographies. With the 41-50 hp category, the sale, a favorable regional mix and improving trends of mechanization, the sector is now being ready to retain its role as an important motivation of India’s national economy and agricultural mechanical market in the medium term.

M&M: Buy | Target RS 3,687

M&M is well positioned for long -term growth, supported by a robust product pipeline up to 2030, with important Ice SUVs, Beels and LCVs that have been launched in Cy26. Geographical strength in highest tractor markets and a favorable recovery of the rural question further support the volumes.

In Q1FY26, M&M surpassed the tractor industry with 10.5% yo -volume growth and expanded the market share to 45.2%, gained ground over all HP segments -especially in the dominant 41-50 hp category (65% of industrial volumes).

Regional profit in East and West India reflects deep rural penetration and effective distribution. The company focuses on a volume of 7% compared to FY25-27E, supported by new launches and national wind. We estimate ~ 14%/13%/16%CAGR in sales/EBITDA/PAT above FY25-27E.

(Disclaimer: recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of economic times)