10 M&M share price target reports by brokerages below. See what is analyst's view on M&M share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
We upgrde M&M to BUY (v/s Hold) led by increasing focus on capital allocation, plans for loss-making subsidiaries (exit or turnaround) and preference to rural exposure. Its emhasis placed on the core intensifies with active search of partner for Sangyong, no bid for truck supply contract in US (under MANA), GenZ exit. We believe these are initial steps to fix ROEs with likely more consolidation. Furthermore, FES segment has strong outlook led by healthy farm sentiments where as widened auto segment losses should improve 2Q onwars. The management also hinted that stake sale in EV business could be an additional catalyst for value unlocking in unlisted subsidiaries. With improved rural outlook, we increase consol EPS by 4%/8% as we expect contribution of high margin FES segment to remain elevated. This has resulted in 50bp/70bp uprade in FY22/23 margins. Hence, we upgrade the stock to BUY with revised SoTP based TP of Rs703 (from Rs531). We value core auto business at 14x (v/s 13x to factor in for superio mix and outlook) plus subsidiary value of Rs158 at 40% holdco discount (v/s 50% earlier).
Since diesel forms majority of its Automotive sales we expect EBITDA margin to be under pressure in FY21 and we expect a contraction of 40bps YoY to 14%, which is down from 14.7% earlier. We expect margins to recover in FY22E along with volume. We have cut our earnings estimates for FY20/21/22E by 2.4%/6.4%/3.3% and we expect a CAGR of 8.5% for FY20-22E. Our updated SoTP-based target price (TP) comes to Rs663 after adjusting for the impairment in Ssangyong investment. We reiterate our Buy rating.
While MM is largest benefeciary of rural recovery benefitting tractor demand, it is highly exposed to BS6 transition and related cost increase challenge (with ~90% of its product portfolio is diesel dependent). Also increasing competion in its core forte (UV2 segment due to MG and Kia) to also dent auto segment performance. Hence, we downgrade MM+MVML FY21/22 EPS by 4% each. We believe valuations for MM is reasonable as expected uptick in tractor segment to partially offset by BS6 challenge in UV business. Hence we maintain Hold with price target of INR600 (based on 12x Mar’22E core EPS plus value of investment in key subsidiaries).
We are upgrading our EPS estimates by 8-9% to factor in the strong margins. M&M’s UV business is facing cyclical headwinds, along with rise in competitive intensity. Further, we expect it to face headwinds in the diesel portfolio during the BS6 transition. The stock trades at implied core P/E of ~11.3x/10.4x. Maintain Buy with TP of ~INR680 (Sep’21 SOTP-based).
We reinstate coverage on Mahindra & Mahindra (M&M) with a NEUTRAL and a SOTP based Sep-21 TP of Rs 570. After outperforming the PV industry over the past decade, we expect growth rates for SUVs to converge. Further, as competition remains intense, M&M’s automotive segment margins are expected to remain under pressure. However, the expected revival in tractor demand (on the back of healthy monsoons) will partially offset the impact from the above. We would advise investors to turn constructive on the stock after further clarity emerges on BSVI/favorable market responses to new launches.
Maintain BUY: The Company is expected to report core EPS of Rs 28.1 and Rs 31.3 in FY20E and FY21E respectively. Based on its core earnings, M&M stock is currently trading at 8.6xFY21E earnings. The stock remains one of the most inexpensive stocks amongst large cap Auto Companies in India. We maintain our BUY rating on the stock with a price target of Rs682 (PER of 12xFY21 core EPS + Rs307 Subsidiary Valuations.
MM’s 2QFY20 performance were in-line both at standalone and MM+MVML. The management has slashed tractor industry growth guidance and now expect a decline of 7-8% (v/s 0-5% earlier). We believe, not only MM is highly exposed to BS6 transition and related cost increase challenge (with ~90% of its product portfolio is diesel dependent) but also increasing competion in its core forte (UV2 segment due to MG and Kia) to also dent auto segment performance. Additionally, with tractor segment contribution is expected to decline over FY20/21, margin profile too is expected to deteriorate with S/A FY20/21 margins at ~11.8%. While maintain our consol EPS, we upgrade FY20/21 S/A EPS by 7-8% to factor in for higher other income. We belive valuations for MM is reasonable, however expected down cycle in tractor business and BS6 challenge in UV business to keep stock under check. Hence we maintain Hold with price target of INR593 (based on 12x Sept’21E core EPS plus value of investment in key subsidiaries).
We believe, company remains susceptible to the current industry slowdown and subdued consumer sentiments. We lower price target to Rs. 555 based on 12.5x FY21E EPS and reiterate our HOLD rating.
Over the last few quarters, the company’s volume growth has remained subdued mainly due to overall slowdown in economy, which has affected the buying sentiment. However, we believe that any revival in auto industry would benefit M&M on the back of its recent new launches and facelift of some models, diversified portfolio, strong brand & distribution network. Considering the above factors, we maintain our Buy recommendation on M&M.
We expect sales & EBITDA to grow at 7.1% and 1.8% CAGR, respectively, for M&M in FY19-21E (with PAT seen declining to ~| 3,950 crore), amid muted outlook for core tractor and PV businesses accompanied by attendant pressure on margins. In our SOTP methodology, we value the standalone business at 6x EV/EBITDA (FY21E basis) and arrive at a target price of | 570 for the company, downgrading it to HOLD. We feel current valuations, however, offer relative comfort against the rest of the OEM pack given thecompany’s strong financials, R&D focus and ongoing efforts on the EV front.
Green shoots seen for tractor segment demand Management indicated that the worst is behind for the Tractor segment seeing that monsoon rains have picked up and as a result Kharif sowing has also picked up. Higher expected rainfall towards the end of the season will facilitate better Rabi sowing as well. Hence, they are looking at an industry growth of 6-8% for the rest of the year, which will cover up the decline so far and result in a flat growth for FY20. In the Automotive segment, they are cautious and will wait for any government stimulus to revive sentiments. M&M expects 2HFY20 to be better on a lower base and demand revival on the back of festivals and pre-buying. M&M’s dealer inventory in both Automotiveand FES segments is under control and it doesn’t see any stress in the dealer health. We maintain ourvolume guidance of 5.9% over FY19-21 but we have trimmed out earnings due to higher cost of the new launches. EPS growth estimate is 6.1% CAGR over FY19-21. Our SoTP-based target price (TP) comes to Rs782. We reiterate our Buy rating. Lower than expected festival demand and pre-buying before BSVI are the key risks.
We expect M&M’s overall volumes, sales and PAT to grow at a CAGR of 4.5%, 6.6% and -4.4% over FY19-21E respectively. Based on its core earnings, M&M stock is currently trading at 5.9xFY21E earnings. The stock remains one of the most inexpensive stocks amongst large cap Auto Companies in India. We maintain our BUY rating on the stock with revised price target of Rs670 (PER of 10xFY21 core EPS + Rs297 Subsidiary Valuations. We have reduced our Target PER from 11x to 10x to factor in muted earning growth over FY19-21E.
Outlook & Valuation: Looking ahead, we expect M&M’s volume to clock 6% CAGR over FY19-FY21E aided by rural demand and new launches. Factoring in the ongoing slowdown and impact of BS-VI transition, we lower our volume estimates for (M&M+MVML) by 5%/6% for FY20E/FY21E. In light of price hike post BS-VI implementation, we reduce our revenue estimates by only 1%/4% for FY20E/ FY21E. We reduce our EBIDTA margin estimates by 80bps/70bps and cut our EPS estimates by 7%/10% for the same period. Notably, in the wake of sharp price correction, the stock looks attractive at current valuation. Expecting meaningful improvement in rural demand, strong products and attractive valuation, we reiterate our BUY recommendation on the stock with a revised SOTP-based Target Price of Rs755 (from Rs835 earlier), valuing M&M+MVML at 6.5x of FY21E EBIDTA at Rs502 and subsidiary at Rs253 post 30% discount to mcap.
We expect M&M’s overall volumes, sales and PAT to grow at a CAGR of 7.1%, 9.5% and 2.7% over FY19-21E respectively. Based on its core earnings, M&M stock is currently trading at 7.9xFY21E earnings. The stock remains one of the most inexpensive stocks amongst large cap Auto Companies in India. We retain our BUY rating on the stock with revised price target of Rs790 (PER of 11xFY21 core EPS + Rs309 Subsidiary Valuations. We have reduced our Target PER from 12x to 11x to factor in muted earning growth over FY19-21E.
Going ahead, sustainence in this share should boost volume growth as well as provide operating leverage benefits for the auto segment margins (especially with launch costs accounted for in FY19 behind us). We hence, expect margins to inch up to 12.8%/12.5% in FY20/21E (expecting some margin pressure in FY21E owing to BS VI related costs). Given the valuation comfort, we maintain ‘BUY’ witha price target of Rs815, based on a core PE of 15x Mar’21E and value ofsubsidiaries at Rs273.
MM’s core business faces headwinds in the form of (a) an uncertain tractor demand outlook due to the cyclical downturn and the initial forecast of El Nino, (b) a weak product lifecycle in UVs, as no major launches are likely till BS-6, (c) a huge product skew toward diesel segment (~96%), wherein prices are likely to increase by ~10-12% and (d) a deteriorating margin profile, with the share of FES likely to decline over FY19-21. However, ~40% correction in its core business valuations from 18.4x in Aug’18 to 11x in Feb’19 largely factors in these challenges, in our view. We, thus, maintain Buy with an SOTP-based TP of INR790 (Mar’21).
We estimate FY18–21 core EPS CAGR would be 11% owing to weaker demand outlook as well a change in product mix. We maintain ‘BUY/SO’ with an SoTP-based TP of INR873 (13x June 2020E core EPS, INR107 cash/share and INR281 for listed subsidiaries). The stock is trading at an FY20E PER of 13.6x.
We expect M&M to report net revenue CAGR of ~12% to Rs 60,634cr over FY2018-20E mainly due to healthy growth in automobile segment i.e. utility vehicles (on the back of new launches and facelift of some models) and strong growth in tractors segment driven by brand recall and improvement in rural sentiment. Further, on the bottom-line front, we expect CAGR of ~16% to `5,429cr over the same period on the back of margin improvement. Thus, we recommend BUY on the stock with a Target Price of Rs 850.
Based on its core earnings, the stock at `683 is trading at a PE multiple of 8.6x FY20E and an EV/EBIDTA of 4.1x FY20E, excluding its subsidiary value of `341per share. We have assigned FY20E PER of 14x to its core earnings and have valued the listed subsidiaries at 25% discount to the market price. We maintain our ACCUMULATE recommendation on the stock with SOTP‐based target price of Rs 899 per share
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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