Global brokerage CLSA upgraded the stock to ‘High Conviction Outperform’ and raised its target price to ₹4,588 per share.
According to CLSA, the farm equipment business reported an EBIT margin of 18.5%, down 85 basis points sequentially, while the automotive business posted an EBIT margin of 7.1%, a decline of 237 basis points quarter-on-quarter.
The brokerage attributed the pressure primarily to higher raw material costs and an 85-basis-point commodity hedging loss, though the margins were largely in line with expectations.
CLSA continues to identify M&M as its preferred pick in the auto sector, citing four key factors: sustained gains in the utility vehicle (UV) market driven by strong execution and an upcoming product pipeline; a resilient tractor business with Q1 volumes rising 19% year-on-year; strong momentum in battery electric vehicles (BEVs); and ongoing capacity expansion to support future demand.
The brokerage also believes consensus expectations for the tractor business remain conservative. While M&M has guided for around 5% volume growth in FY27, current estimates imply a sharp decline in volumes for the remainder of the fiscal year despite healthy reservoir levels, leaving room for earnings upgrades.
Nomura maintained its ‘Buy’ rating on the stock with a target price of ₹4,875.
The brokerage noted that first-quarter margins were slightly below its estimates but expects profitability to recover, supported by additional price hikes.
It also said valuations remain attractive at 12.4x FY28 estimated EV/EBITDA and 16x FY28 estimated P/E, excluding subsidiaries, while highlighting a strong growth outlook across the company’s businesses.
Q1FY27 highlights
Mahindra & Mahindra reported a healthy set of June quarter numbers, with consolidated net profit rising 34% year-on-year to ₹5,455 crore, while revenue increased 27% to ₹57,533 crore.
EBITDA grew 22% to ₹10,172 crore, although the EBITDA margin narrowed to 17.7% from 18.3% a year ago.
Total vehicle volumes increased 21% year-on-year but declined 7% sequentially. Automotive volumes rose 23% year-on-year and fell 2% quarter-on-quarter, while tractor volumes climbed 17% year-on-year and 32% sequentially.
Management maintained a positive outlook, supported by new product launches, export expansion and improvements in its international operations. The company also reiterated its plans to double manufacturing capacity over the next five years.
Brokerages also highlighted improving rural fundamentals, with the rainfall deficit narrowing to 15% and kharif sowing accelerating to 79 million hectares, factors that could support farm equipment demand.
Mahindra & Mahindra shares ended 2.3% higher at ₹3,294.60 on Thursday. Despite the recent gains, the stock remains down more than 12% so far in 2026.
