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M&M Share Price Races to 52-Week High As Q4 Revenue Beats Estimates; Should you Buy?

By: Aparna Deb

Last Updated: May 30, 2022, 14:46 IST

Shares of Mahindra & Mahindra (M&M) rose to record high on the BSE after the automaker reported a five-fold jump in standalone profit

Shares of Mahindra & Mahindra (M&M) rose to record high on the BSE after the automaker reported a five-fold jump in standalone profit

Shares of Mahindra & Mahindra (M&M) rose to record high on the BSE after the automaker reported a five-fold jump in standalone profit

M&M Shares: Mahindra and Mahindra share prices on Monday jumped as the automaker led a jump of over 4 per cent on the BSE & NSE intraday trade on Monday. Mahindra and Mahindra share price on BSE rose 4.30 per cent or 41 points to Rs 994.20. On the NSE, the share price went up by 4.41 per cent or 42.05 points. The scrip has been gaining for the last three sessions in a row and has gained over 16 per cent year-to-date (YTD).

The company on Saturday reported slightly above estimated earnings in the fourth quarter of the financial year 2021-22 (Q4FY22). The company also gained the top spot in revenue market share in the sports utility vehicle (SUV) segment. Meanwhile, revenue expanded by 28.2 percent on a year-on-year (YoY) basis to Rs 17,124 crore. However, earnings before interest, tax, depreciation and amortization (EBITDA) saw a dip in March ended quarter, whereas the margin slid by over 300 basis points.

M&M said it achieved the highest ever standalone revenue for auto and farm segments at Rs 55,300 crore for FY22, which is 29 percent higher than the previous year’s. It also said the company’s auto business delivered the highest ever quarterly UV (utility vehicle) volumes in Q4 with 42 percent YoY growth.

On leading the SUV revenue market share, Rajesh Jejurikar, Executive Director, M&M, said, “It indeed has been a very gratifying experience to see our SUV revenue market share come back to a number one position. And we are focusing on revenue market share because our products average selling price is way above most of our competitors. We play in a different segment and we need to take that on account when we look at our share.”

What Should Investors Do?

“M&M’s net realization improved and volumes grew 13% YoY in 4QFY22. Contributions from subs/JVs/Associates continued to improve. Farm subsidiaries recorded the seventh consecutive quarter of positive EBIT. Semiconductor supplies improved in 4QFY22, resulting in the highest ever quarterly UV volumes,” said domestic brokerage Motilal Oswal while maintaining its buy tag on M&M share price.

Morgan Stanley maintains a bullish view on the stock with a target price of Rs 1,145 after the company’s Q4 earnings came in above estimates. It sees upside risks to forecasts for tractor volume, a key stock driver for M&M. It said SUV business turnaround and relatively cheap multiples keep the brokerage to maintain an Overweight stance with a target price of Rs 1145 per share (20 per cent upside).
Jefferies noted that M&M’s Q4 volumes grew 13 per cent YoY but Ebitda fell 1 per cent. It has maintained its underperform rating on the stock with a target of Rs 615.

The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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first published:May 30, 2022, 13:24 IST
last updated:May 30, 2022, 14:46 IST