After Tata Motors, what if M&M demerges key units? Here’s what HSBC analysts say

Tata group auto giant Tata Motors’ decision to demerge its passenger vehicle and commercial vehicle businesses into two separate listed entities has raised questions on the possibility of rival auto manufacturers taking similar steps. In a research report, analysts at foreign brokerage HSBC have pointed out that a move by Mahindra & Mahindra (M&M) to demerge its farm and auto businesses may unlock significant value for investors.

Last week, Tata Motors announced its decision to split its PV and CV businesses into two listed firms, separating its commercial vehicle business from its passenger vehicle arm. The passenger vehicle company will house Tata Motors' lucrative Jaguar Land Rover business, the Tata group company mentioned.

How HSBC analysts view M&M

HSBC pointed out that M&M continues to perform well operationally, driven by the performance of its SUVs launches, with steady upside risks from demand for its tractors.

The brokerage has maintained its ‘buy’ rating on M&M and raised its target price for the counter to Rs 2,300 from Rs 1,900. Its target implies an upside potential of 21.2 per cent from the previous close.

M&M share price target: JPMorgan maintains 'buy'

JPMorgan has retained an ‘overweight’ rating on the M&M counter and raised its target by Rs 135 per equity share to Rs 2,015 per share,  an upside of  6.2 per cent from the previous close.

M&M share price today

Shares of M&M edged lower on Monday, March 11. The counter settled 0.47 per cent lower at Rs 1,888.6 on NSE at the last count, outperforming a 0.59 per cent fall in the Nifty Auto index.

How did M&M perform in Q3?

The automaker registered a 60.6 per cent year-on-year jump in profit after tax to Rs 2,454 crore for the December quarter. Its quarterly revenue from operations increased 16.5 per cent to Rs 25,228.5 crore, according to a regulatory filing. Read more on M&M Q3 earnings

M&M share price history

The Mahindra & Mahindra stock has gained nearly 60 per cent in the past year, outperforming a 30 per cent rally in the headline Nifty50 index but underperforming a nearly 70 per cent surge in the Nifty Auto gauge.

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