M&M shares rise: Automotive giant Mahindra & Mahindra (M&M) is making major strides in its pursuit of e-mobility and sustainable growth, bolstered by a recent collaboration with Volkswagen Group and a strong financial performance in the December quarter (Q3FY24).

The automotive giant’s shares surged 5.61 per cent to hit a fresh 52-week high of Rs 1,864.65 per share on Friday following the announcement of a supply agreement with Volkswagen Group for components of Volkswagen's Modular Electric Drive Matrix (MEB) for Mahindra's purpose-built electric platform INGLO. 

Notably, the automaker is top gainer on 30-share Sensex.

The deal encompasses the supply of crucial electric components and unified cells, underscoring M&M's commitment to advancing electric vehicle (EV) technology and expanding its market presence in the burgeoning EV segment. With both companies exploring potential expansions of their collaboration, the agreement sets a promising trajectory for future endeavours in sustainable mobility.

Strong Q3 results 

In addition to its strategic collaborations, the Mumbai-based company reported robust financial performance in the December quarter (Q3FY24), with a 61 per cent year-on-year surge in net profit to Rs 2,454 crore, helped by robust performance of the automotive segment, and strong operating performance.

The company’s revenue climbed 17 per cent annually to Rs 25,289 crore. Additionally, its earnings before interest, taxes, depreciation and amortisation (EBITDA), also known as operating profit, zoomed 15 per cent annually to Rs 3,237 crore while the margin came in at 12.8 per cent.

Brokerages bullish on M&M

Analysts from various brokerage firms have expressed bullish sentiments towards M&M post the December quarter results, highlighting the company's potential for growth across its key verticals.

Motilal Oswal's analysis underscores M&M's strong positioning in the passenger vehicle (PV) segment, driven by robust demand for its sports utility vehicles (SUVs) and sustained volume traction expected over the next few quarters. 

Additionally, M&M's market leadership in the light commercial vehicle (LCV) category positions it favourably for outperformance despite modest industry growth projections. “Hence, we reiterate our ‘buy’ rating with a target price of Rs 2,005.”

Meanwhile, brokerage firm JM Financial's report stresses the positive outlook for M&M's tractor segment in financial year 2025 (FY25), buoyed by anticipated improvements in industry volumes driven by favourable factors such as normal monsoons and positive terms of trade. 

“Higher operating leverage and benign commodity costs are expected to support the margin performance going ahead. Driven by strong demand tailwind in autos, we maintain ‘buy’ with a March 2025 target price of Rs 1,850,” JM Financial said. 

Brokerage firm Emkay's assessment underscores M&M's steady operational results, with revenue growth driven by volume expansion and stable realisations. 

The company's focus on demand generation in the automotive segment, coupled with prudent cost management, is expected to support margin performance going forward.  “We maintain ‘add’ on M&M, given supportive valuations, with an unchanged sum of the parts (SOTP) based target price of Rs 1,750 per share,” Emkay added

While LKP Securities echoes sentiments of optimism, highlighting M&M's strong SUV demand and its potential to leverage new launches and partnerships to drive growth across EVs, LCVs, and 3-wheelers.

Mahindra & Mahindra's strategic collaborations, coupled with its robust financial performance and positive outlook across key segments, position it as a formidable player in the evolving landscape of sustainable mobility and automotive innovation. “We maintain BUY rating on attractive valuations; SoTP-based target price stands at Rs 2,051,” LKP Securities added.

With a clear focus on leveraging partnerships, technological advancements, and market opportunities, M&M continues to chart a course towards long-term growth and leadership in the automotive sector.

As of 11:41 am, shares of M&M were trading 3.84 per cent higher at Rs 1,833.35 per share.