Mahindra & Mahindra Ltd. share price target

Mahindra & Mahindra (M&M) has corrected ~20% in the past couple of months due to fears of El Nino impacting tractor demand in FY24 along with receding waiting period of its UV portfolio. In the past 15 years, on four occasions of El Nino, tractor volume declined by an average of ~12%. Thus, we are building in 12% tractor volume decline for M&M in FY24 as against our earlier estimate of ~6% growth.

Mahindra & Mahindra’s (M&M) Q3FY23 EBITDA margin at 13% (up 100% bps QoQ) was in line with our estimates with auto/FES EBIT margins at 6.7%/16.6%. Gross margin expanded by 50bps QoQ and the rest was led by operating leverage. FES segment ASP has increased from Rs530k-560k/unit a year back, to ~Rs590k/unit at present led by price hikes to pass on input cost inflation.

Q2 net sales of Rs 208bn (+6% QoQ) driven entirely by realisation gains with NRPV at Rs 763k (+6% QoQ)