M&M Q2 Review: Analysts Cheer Strong Order Book, Launches Amid Chip, Inflation Woes
Here’s what brokerages have to say about Mahindra & Mahindra's’ second-quarter results:
Most brokerages remained upbeat on Mahindra & Mahindra Ltd. on the back of a healthy order pipeline in the automotive segment, robust demand and new product launches even as semiconductor shortage and commodity inflation woes persist.
The automaker saw its net profit before tax and exceptional item jump over the preceding three months in the July-September period.
M&M's overall automotive sales rose 17% sequentially in the second quarter. Its passenger car sales, too, increased 17%, but that of tractors fell 11%.
Shares of the company gained 3% to Rs 919 apiece as of 9:30 a.m. on Wednesday. Of the 42 analysts tracking the company, 36 have a 'buy' rating, two suggest a 'hold' and four recommend a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 12.9%.
The stock's trading volume was 8.1 times the 30-day average volume for this time of the day.
Here’s what brokerages have to say about Mahindra & Mahindra's’ second-quarter results:
Dolat Capital
Maintains ‘buy’ with a price target of Rs 1,037 apiece, implying a potential upside of 16%.
M&M’s Ebitda was below estimates in the second quarter of FY22 due to commodity inflation.
Expecting strong growth in automotive segment, on the back of healthy order book (1,60,000 vehicles) and easing of supply side challenges.
Company continues to follow up on its commitment of prudent capital spending and curtailing loss-making subs.
Headwinds such as semiconductor shortage, regional lockdowns and commodity inflation persists.
Company to continue to take price increases wherever necessary to protect margins and cover the growing raw material cost.
Systematix Institutional Equities
Upgrades from ‘sell’ to ‘hold’ with a price target of Rs 820 apiece, implying a potential downside of 8.16%.
Ebitda margin is in line with estimates as raw material inflation was offset by a sharp increase in average selling price.
Company seeing decent success in new product launches in automotive segment and has an order book of over 1,60,000 vehicles.
M&M plans to launch multiple electric vehicles over the next five years starting with two new models in FY23.
Remain skeptical about the growth of the tractor industry beyond FY22 estimates as it nears its cyclical peak.
Prabhudas Lilladher
Maintains ‘buy’ with a price target of Rs 1,061 apiece, implying a potential upside of 18.8%.
M&M is playing on its core strengths.
Posted a decent operating performance amidst challenging raw material scenario.
Baton of growth shifting from tractor to automotives gaining traction in the farm machinery business.
Strong product pipeline in utility vehicles and tractors to help outperform industry.
Improved capital allocation to improve return matrix.
Nirmal Bang institutional Equities
Maintains ‘buy’ with a price target of Rs 1,042 apiece, implying a potential upside of 16.6%.
Steady results; tractors holding ground; new launches to drive autos.
Strong product launch pipeline and robust demand should support volume.
M&M’s focus on its capital allocation strategy to improve return on equity going ahead.
Tractor segment to outperform the industry as supply chain constraints ease.
Have increased earnings estimates by 7%-8% for FY23E-FY24E, factoring in improved volume outlook on the back of strong order book in autos and new product launches across segments.