M&M Rockets 21%? Motilal Oswal Unlocks 3 Growth Drivers
Overview
Motilal Oswal maintains a 'Buy' rating on Mahindra & Mahindra, setting a target price of ₹4,521, implying nearly 21% upside. The bullish outlook is driven by a robust launch pipeline including XUV7XO and XEV 9S, projected 14% UV volume growth, strong tractor segment outlook, and a dominant position in Light Commercial Vehicles, alongside significant financial growth estimates.
Stocks Mentioned
Motilal Oswal Bullish on M&M
Motilal Oswal has reiterated its 'Buy' rating for Mahindra & Mahindra (M&M), establishing a target price of ₹4,521. This valuation suggests a potential upside of approximately 21% for the auto major over the next twelve months. The brokerage cited several critical growth drivers supporting its optimistic stance.
Strong Launch Pipeline Fuels UV Growth
The company's strategic product launches, including the recently introduced XUV7XO and XEV 9S, alongside plans for two more internal combustion engine (ICE) variants and an electric vehicle (EV) in FY27, are expected to drive significant volume expansion. Motilal Oswal forecasts a 14% compound annual growth rate (CAGR) in Utility Vehicle (UV) volumes between FY25 and FY28.
Tractor Segment Momentum
Positive sentiment in the farm sector, bolstered by strong kharif sowing, ample reservoir levels, and favorable farmer economics, is propelling the tractor industry. M&M's management has revised industry growth guidance upwards to low double digits for FY26. Consequently, Motilal Oswal factors in a 10% annual volume growth for M&M's tractor division on a compounded basis from FY25 to FY28.
Dominance in Light Commercial Vehicles
M&M continues to command a leading position in the below-3.5-tonne Light Commercial Vehicle (LCV) segment, increasing its market share to 51.9% in FY25. A projected demand revival in the pick-up truck sub-segment, aided by recent GST rate adjustments, is anticipated to support an 11% volume CAGR through FY28.
Robust Financial Projections
Motilal Oswal anticipates robust financial performance for M&M, projecting a 19% annual revenue CAGR between FY25 and FY28. Profit growth is expected to mirror this strong trajectory over the same period. These forecasts are underpinned by sustainable long-term growth drivers across the company's core business verticals.
Unlocking Value in 'Growth Gems'
M&M has identified nine businesses designated as 'growth gems' with an ambitious target to achieve five-fold growth within five to seven years. Motilal Oswal highlights that any value realized from these segments presents substantial 'option value' and could yield additional shareholder returns.
Recent Performance and Results
Despite a 2.3% dip in the share price over the last five trading sessions, M&M has shown resilience, with minimal change over the past month and significant returns of over 19% in six months and nearly 23% in the last year. The company reported a strong Q2 FY26, with consolidated profit after tax rising 28% year-on-year to ₹3,673 crore on a consolidated revenue increase of 22% to ₹46,106 crore.
