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Motilal Oswal’s research report on Mahindra and Mahindra

We met with the management of Mahindra & Mahindra (MM) to gauge the overall environment – both at macro and company levels. Management indicated that demand environment for the auto business has been stable in general but it expects slower growth for tractors in FY24 (even under normal monsoons) due to high base and three Navratras in FY23. While chip supply is improving, it is still not adequate enough to ramp-up production meaningfully. Chip supply is the only restricting factor to reach full capacity for production of SUVs. Profitability of both businesses should improve though ramp-up of new businesses (EVs and farm equipment) would dilute expansion. However, commodity cost inflation visible from the lows of 3QFY23 is the primary risk of MM’s business. We cut our FY24E EPS by 8% to factor in: a) lower tractor/SUV volumes, and b) the adverse impact of losses from new businesses. We reiterate our BUY rating as we still expect 20% EPS CAGR and 2pp RoCE improvement over FY23-25, along with attractive valuations.


Hence, we maintain our BUY rating with a TP of INR1,525 (premised on Mar’25E SoTP or implied core P/E at TP, which stands at 15.7x FY25E EPS).

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Mahindra & Mahindra - 09 -03 - 2023 - moti

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