M&M’s strong Q2 results get thumbs up from analysts; should you buy the stock?
₹3,451.88 crore, while revenue from operations in Q2FY24 rose 15.7% to ₹24,309.89 crore. M&M’s revenue growth during the quarter ended September 2023 was driven by volumes growth of 11% YoY, while Average Selling Prices (ASP) grew 5% YoY.
The company’s automotive segment saw a healthy double-digit growth during the festive season, while the farm equipment segment’s performance was muted as its revenue fell 0.4% YoY. Read here: M&M Q2 Results: Net profit jumps 67% to ₹3,452 crore; revenue rises 16% YoY Analysts maintained a bullish view on M&M on the back of strong earnings growth and attractive valuations of M&M shares.
Here’s what brokerages said: “While the outlook for tractors remains stable, we expect the Auto business to be the key growth driver for the next couple of years," brokerage firm Motilal Oswal Financial Services said. Despite deterioration in the mix, the brokerage estimates revenue, EBITDA and PAT CAGR of 15%, 19% and 21% over FY23-25E.
“While the valuation is still attractive versus peers, M&M has seen a substantial rerating in FY23 as the stock is now trading in line with its five-year average core P/E (against discount of 30% earlier), driven by a strong performance in the SUV segment, market share gain in tractors, and a new launch pipeline in EVs," Motilal Oswal said. The brokerage reiterated its ‘Buy’ rating on the stock with a target price of ₹1,775 per share.
(Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) LKP Securities expects strong SUV run to continue as the semiconductor issue is minimal. Within the Auto sector, the robust order book of Scorpio N variants, Thar and XUV family should assist
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