M&M shares surge over 3% after strong Q1; brokerages stay bullish

Shares of Mahindra & Mahindra (M&M) climbed over 3% in early trade on Friday after the automaker reported a stellar performance for the June quarter. Sentiment was further boosted after several brokerages reiterated bullish calls, expecting automotive margins to improve through pricing actions, cost optimisation and operating leverage.

Reacting to the Q1 results, M&M shares rose as much as 3.4% to ₹3,389.05 on the BSE, taking its market capitalisation to over ₹4.17 lakh crore. The auto heavyweight has gained nearly 10% over the past month, though it remains down more than 11% year-to-date.

M&M reported a 34% year-on-year rise in consolidated net profit to ₹5,455 crore for the first quarter of FY27, while revenue increased 28% to ₹58,188 crore. The company's auto and farm businesses continued to drive growth, with segment profits rising 18%, while its financial services business posted 13% growth in assets under management.

Group CEO and Managing Director Anish Shah said the company delivered a strong start to FY27 despite macroeconomic headwinds, supported by its diversified portfolio and leadership positions in the auto and farm businesses.

Brokerages stay bullish

Global brokerage CLSA upgraded M&M to ‘High Conviction Outperform’ from ‘Outperform’ and raised its target price to ₹4,588. The brokerage said automotive EBIT margins were broadly in line with expectations despite elevated raw material costs.

Nomura maintained its ‘Buy’ rating with a target price of ₹4,875. While the June-quarter operating margin came in slightly below its estimates, the brokerage expects profitability to recover through further price hikes. It also said valuations remain attractive at 12.4x FY28 estimated EV/EBITDA and 16x FY28 estimated earnings, excluding subsidiaries, while reiterating a positive outlook across M&M's businesses.

Domestic brokerage Motilal Oswal said the June-quarter profit exceeded its estimates, aided by higher-than-expected other income, while farm margins outperformed expectations. It retained its ‘Buy’ rating with a target price of ₹4,108, citing a healthy product pipeline and strong management guidance. The brokerage expects the company to deliver revenue, EBITDA and PAT CAGRs of around 16%, 13% and 14%, respectively, over FY26-FY28.

Management guided for mid-single-digit growth in the tractor industry, mid-to-high teens growth in the SUV segment and high-single-digit growth in the light commercial vehicle industry during FY27. It also expects automotive margins to improve from the second quarter through pricing actions, operating leverage and cost optimisation, while farm profitability is likely to strengthen in the second half as seasonal demand improves and commodity inflation eases.

M&M also plans to expand its SUV production capacity from 64,500 units per month currently to 68,000 units by the end of the first half of FY27, and further to 82,000 units per month by the end of the fiscal year.

JM Financial maintained its ‘Buy’ recommendation and increased its target price to ₹3,905 from ₹3,800. Although EBITDA margins came in below its expectations, the brokerage expects pricing actions, cost optimisation and operating leverage to support margin recovery. It also expects healthy rural demand to be supported by improving rainfall, higher reservoir levels and stronger kharif sowing.

Choice Broking also reiterated its ‘Buy’ rating with a revised target price of ₹4,150. The brokerage believes sustained SUV demand, capacity expansion, rising electric vehicle penetration and improving rural fundamentals provide strong long-term earnings visibility, although commodity inflation and rising competitive intensity remain key risks.

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