On Friday, BofA Securities upgraded Mahindra & Mahindra Ltd (MM:IN) (OTC: MAHMF) stockfrom Neutral to Buy, setting a new price target of INR3,050.00, up from the previous INR2,480.00. The upgrade reflects the firm's expectation of multiple growth drivers and catalysts for the company over the next 12 to 18 months.
In the automotive sector, Mahindra & Mahindra is anticipated to see steady earnings growth, driven by new SUV launches and entry into the pure electric vehicle (EV) market. Additionally, a cyclical upturn in the tractor segment is expected to contribute to the company's performance.
The firm also emphasizes the potential of Mahindra & Mahindra's conglomerate structure, which includes a portfolio of both listed and unlisted subsidiaries. These subsidiaries are seen as integral to the company's growth strategy, with a focus on areas such as manufacturing, capital expenditure, technology, green energy, EVs, and financial services.
BofA Securities projects an 18% compound annual growth rate (CAGR) in consolidated earnings per share (EPS) for Mahindra & Mahindra from fiscal years 2024 to 2026, reaching Rs131/share in FY26. This growth is expected to be led by the turnaround of listed subsidiaries and the scale-up of emerging subsidiaries, referred to by the company as "growth gems."
The report concludes that Mahindra & Mahindra's alignment with the broader Indian growth narrative makes it an attractive investment. With an estimated price-to-earnings (PE) ratio of 19x for FY26, the valuation is deemed favorable by BofA Securities, even after considering the stock's recent price increase over the last three months.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.