Mahindra and Mahindra (M&M) shares pared early gains to trade lower during Monday’s session despite the company registering healthy third-quarter earnings for this fiscal. The auto stock made an intraday high of Rs 1383.85 and declined nearly 3 per cent to hit the day’s low of Rs 1325 apiece today.

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At around 11:50 AM, the stock was down more than Rs 21 or 1.5 per cent to Rs 1343.9 per share against Friday’s closing of Rs 1365.2 apiece.

The auto major’s profit grew by 14 per cent to Rs 1,528 crore for the October- December quarter of the financial year 2022-23 (Q3FY23), while its revenue surged 41 per cent to Rs 21,654 crore for the third quarter and margins jumped 125 basis points to 13 per cent year-on-year.

Also Read: Mahindra & Mahindra Q3 Results: Net profit grows 14%, margin meets analysts' estimates

M&M’s stock price has grown at around 13 per cent compound annual growth rate (CAGR) from Rs 744 levels in February 2018, outperforming the wider Nifty Auto index, ICICI Direct Research said in a report.

The brokerage retained a ‘buy’ rating on the stock amid sturdy demand prospects across its product profile, robust order book, and margin improvement targets in the auto domain. It expects the stock may touch Rs 1,665 per share levels, implying more than 22 per cent upside potential going forward. 

Brokerage Rating Target price
CLSA Outperform Rs 1,583
Morgan Stanley Overweight Rs 1,472
Jeffieries Underperform Rs 1,165
JPMorgan Overweight Rs 1,520
Goldman Sachs Buy Rs 1,600
Nomura Buy Rs 1,718

Similarly, another brokerage firm Motilal Oswal expects the auto business of M&M to be a key growth driver for the next couple of years amid an improved outlook for the Tractors segment.

Also Read: Street remains unimpressed by M&M's better-than-expected margin growth; what should investors do?

Despite the deterioration in the mix, the brokerage maintains a 'buy' rating with a target of Rs 1,550 a share.

While the stock is still cheap as compared to peers, it has been substantially re-rated for the last two quarters as it is now trading in line with its 5-year average core PE, Motilal Oswal said.

The stock price of Anand Mahindra-led auto company has been up more than 62 per cent in the last one-year period as compared to a nearly 6 per cent rise in the Nifty50.

The counter so far this year has gained 6 per cent against over a 2 per cent fall in the benchmark index.