On Thursday, Mahindra & Mahindra Ltd. (MM:IN) (OTC: MAHMF) received an optimistic outlook from Jefferies, as the firm upgraded the stock from Hold to Buy and significantly increased the price target to INR2,910.00, a substantial rise from the previous INR1,615.00 target. The upgrade comes after observing the company's performance and future prospects in the automotive industry.
The firm noted that tractor volumes for Mahindra & Mahindra have been declining over the last four quarters, but the industry appears to be in the late stages of this downturn. Additionally, Mahindra's sport utility vehicle (SUV) portfolio has shown considerable strength, with plans to launch 13 new SUV models, which include 6 internal combustion engine (ICE (NYSE:ICE)) vehicles and 7 battery electric vehicles (BEVs), by the year 2030.
The firm's analysis highlighted that Mahindra's fourth-quarter EBITDA increased by 21% year-over-year and was 13% higher than their own estimates. Based on these results, earnings per share (EPS) forecasts for fiscal years 2025 and 2026 have been upgraded by 16-21%.
In terms of valuation, Mahindra's core FY25E price-to-earnings (PE) ratio is estimated at 23 times, which is above its historical average of 14 times. However, it remains 20% below the blended average of its peers, suggesting room for growth in the eyes of the firm. The combination of strong product plans and financial performance has led to a more positive stance on Mahindra's stock prospects.
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