scorecardresearchM&M Stock Check: Here's what fundamental and technical analysts say about

M&M Stock Check: Here's what fundamental and technical analysts say about investing in it

Updated: 05 Aug 2022, 03:56 PM IST

  • M&M is to announce its June quarter earnings today and brokerage firms expect a healthy set of numbers form the automobile player.

FILE PHOTO: Kotak Securities expects a 69% year-on-year (YoY) jump in M&M's net sales in Q1FY23 while adjusted PAT may rise 64% YoY. REUTERS/Danish Siddiqui

FILE PHOTO: Kotak Securities expects a 69% year-on-year (YoY) jump in M&M's net sales in Q1FY23 while adjusted PAT may rise 64% YoY. REUTERS/Danish Siddiqui

Shares of Mahindra & Mahindra (M&M) have been on a roll this year as the stock is up more than 50% in the current calendar year while the benchmark Sensex is almost flat.

In early trade on August 5, the stock rose about a percent to hit its fresh all-time high of 1,279 on BSE. However, the stock erased all gains and ended 2.04% lower at 1,236.20.

The company announced its June quarter earnings today. The company reported consolidated revenue of 28,412 crore in Q1FY23, up 48% against 19,172 crore reported in the same quarter a year ago.

The company's net profit came at 2,196 crore, up more than 5 times against 424 crore reported a year ago.

Fundamental views

Analyst: Atul Karwa, Research Analyst, HDFC Securities

M&M is the world’s largest tractor manufacturer and the third largest passenger vehicle manufacturer in India. M&M has a healthy order book with the open booking of 170k units at the end of Q4FY22. Additionally, its recently launched Scorpio-N has garnered over 100k bookings. It has a strong product pipeline in UVs and tractors to help outperform the industry. The company plans to launch 16 electric vehicles by 2027, out of which 8 will be electric SUVs and 8 light commercial vehicles.

The tractor segment is seeing a demand revival and M&M is increasing its market share. Management has raised overall Capex guidance at the group level to 195bn from 170bn over FY22-24E, largely for capacity expansion in auto, FES segment, and EVs. We have a buy call on the stock with a target of 1390.

Analyst: Sneha Poddar, AVP Research, Broking & Distribution, Motilal Oswal Financial Services

Tractors are showing signs of a recovery, and Pickup UVs are on a strong footing in terms of outlook, M&M's competitive positioning, and industry-level consolidation. Its SUV business is firing on all cylinders on blockbuster launches.

The launch of Scorpio N recently could be the growth catalyst. Thus while the outlook for Tractors is improving, we expect the auto business to be a major driver of growth over the next couple of years, led by strong momentum in both SUVs (driven by new products and the easing of supply issues) and LCVs (cyclical recovery). We estimate an EBITDA/EPS CAGR of about 26%/21% over FY22-24.

Technical views

Analyst: Jigar S. Patel, Sr. Manager - Equity Research, Anand Rathi

On the Monthly chart, this counter is near resistance levels of approximately 1300. Since March 2020 the counter has witnessed a whopping 425% return and also broke the swing high of 954 which was made in August 2018.

Currently, the counter is in between a 1.41 and 1.618 extension ratio which is also one of the extreme levels of the entire Harmonic arsenal. On the indicator front, monthly MACD is overstretched with monthly volume not able to cope with a rising price which is a sign of caution.

Last but not the least, fresh buying in the counter is not advisable at the current market price. One can profit profits between 1,250-1,350.

Mahindra and Mahindra technical chart.

Analyst: Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher

M&M has given a decent run in the past 4-5 months from the low made near 670 to the high made at 1265 levels with overall bias maintained as of now.

Some resistance is visible near the peak level of 1265 zone and would require a decisive move past this level for a fresh upward move.

On the downside, the stock has a major support zone near 1120 levels below which the trend would change with bias turning a little bit weak and one can think of booking profit.

So overall, currently the bias remains bullish and a dip below 1120 would negate our view. A decisive move above 1265 would further strengthen the trend with the next target expected near 1380-1400 levels.

Mahindra and Mahindra technical chart

According to a MintGenie poll, an average of 42 analysts have a ‘strong buy’ call on the stock.

Disclaimer: The views and recommendations are those of individual analysts or broking firms and not of MintGenie.

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First Published: 05 Aug 2022, 12:08 PM IST