Mahindra & Mahindra shares up for 7th day; stock can rise up to Rs 1,600 level, brokerage targets suggest

Shares of Mahindra & Mahindra Ltd on Monday extended their gains for the seventh straight session. The stock today rose 3.71 per cent to close at Rs 1,329.45. The counter has slipped 4.77 per cent from its 52-week high of Rs 1,396, a level seen on February 16, 2023. On a year-to-date (YTD) basis, the scrip has climbed 5.27 per cent. It has surged 33.22 per cent in the past one year. The automaker's standalone profit after tax rose to Rs 1,549 crore in the January-March quarter (Q4 FY23), up 22.07 per cent from Rs 1,269 crore a year earlier. M&M recorded a one-time charge of Rs 512 crore due to impairment provisions on long-term investments. Also, the company said it raised the cash deployed for 2022-2024 capex for the auto business to Rs 9,500 crore from Rs 7,900 crore.

Prabhudas Lilladher has retained its 'Buy' call on the counter with a one-year target price of Rs 1,585. At today's closing price of Rs 1,329.45, the brokerage's target price suggested a potential upside of 19.22 per cent.

"M&M's Q4 FY23 revenue came above our and consensus estimate, led by higher-than-expected average selling prices (ASPs) (at Rs 809k, +5.3 per cent QoQ). However, EBITDA margin at 12.40 per cent came below our estimate of 12.80 per cent, due to a higher mix of auto segment and impact from farm machinery in FES (Farm Equipment Sector) segment. Management noted that commodity costs have softened and should support margins, but noted that semiconductor shortage continues to impact volumes at around 3k units per month," the brokerage stated.

"M&M should benefit, given growing customer preference for SUV, capacity ramp-up to fulfill strong order book, market share gains in the tractor industry and strong response to EV portfolio (XUV4OO). Also, benign RM, operating leverage and end of volume of the introductory priced model would benefit margins," Prabhudas mentioned.

Orderbook stands strong at 292k bookings compared to 266k in Q3 FY23 largely led by the increase in Thar and XUV4OO, the brokerage further said.

ICICI Securities also has a 'Buy' call on the counter with a revised target price of Rs 1,478 from Rs 1,386 earlier. A slew of other brokerages has also given a 'Buy' call. JM Financial, Kotak Institutional Equities, Motilal Oswal Financial Services, Nuvama Institutional Equities and Antique have assigned target prices of Rs 1,600, 1,525, 1,500, 1,470 and 1,456, respectively.

On the technical setup, near-term support on the counter could be seen at Rs 1,303.

"Decent Q4 FY23 results have led to a strong uptrend in Mahindra & Mahindra stock price but also overbought on the daily charts with strong resistance at Rs 1,367. A daily close below the support of Rs 1,303 could lead to targets of Rs 1,263-1,198 in the near term," said AR Ramachandran from Tips2trades.

Meanwhile, Indian equity benchmarks extended their gains on Monday amid positive global cues. The domestic indices surged today, led by gains in banks, financials, metals and consumer stocks.