Buy Mahindra & Mahindra, target price Rs 1500: Prabhudas Lilladher

Prabhudas Lilladher has buy call on Mahindra & Mahindra with a target price of Rs 1500. The current market price of Mahindra & Mahindra is Rs 1258.4.

Mahindra & Mahindra Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 155871.48 Crore) operating in Auto sector.

Mahindra & Mahindra Ltd. key Products/Revenue Segments include Automobile-Light, Medium & Heavy Commercial, Jeep, Passenger Car, Sale of services, Scrap, Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 28628.39 Crore, up 9.20 % from last quarter Total Income of Rs 26215.47 Crore and up 47.81 % from last year same quarter Total Income of Rs 19368.16 Crore. Company reported net profit after tax of Rs 1918.04 Crore in latest quarter.

Investment Rationale
M&M is preferred picks in the autos space given (1) visible benefits from management aggression (2) growth revival in automotive segment from robust product launches, strong order book and semiconductor supply issues easing out (3) 200bps market share gain in tractor segment (market leader with 40% share) plus strong leadership in high growth farm implements segment and (4) >300bps margin expansion over FY22-25E, led by fading commodity inflation and operating leverage. It believes that the stock will trade at a premium to its historic P/E, given its revamped SUV business with success in premium UV segment and improved capital allocation strategy (as it moves closer to 18% RoE targets). It recommends ‘BUY’ with a target price of Rs 1,500 (at 18x core Sep-24E EPS, Rs 280 for subsidiaries at 30% holdco discount).

Promoter/FII Holdings
Promoters held 19.45 per cent stake in the company as of 30-Jun-2022, while FIIs owned 43.61 per cent, DIIs 23.26 per cent.