Shares of Mahindra and Mahindra (M&M) rose by 2% on October 7, following an upgrade by CLSA from 'sell' to 'outperform.' This change in rating boosted investor confidence, leading to a surge in M&M's share price to ₹3,119 in morning trade. CLSA's positive outlook comes with an updated price target of ₹3,400, forecasting an 11% upside potential from the current market price of ₹3,060.
For those looking to buy shares online, this upgrade highlights the potential growth opportunities within M&M, particularly in its automotive and tractor divisions.
CLSA's upgraded outlook and price target
CLSA's decision to upgrade M&M's rating is based on multiple growth triggers that they expect will drive the stock's future performance. Their new price target of ₹3,400 reflects an 11% potential upside from the previous closing price of ₹3,060. M&M shares have already shown strong performance this year, rallying by 76%, making them the best-performing stock on the Nifty in 2023.
This rise is significant for those planning to buy shares online, as it underscores the stock's ability to outperform market trends.
Growth in the SUV market and rising profitability
One of the key reasons behind CLSA's upgraded rating is M&M's robust portfolio of utility vehicles (UVs), which has provided the company with superior pricing power. Structural improvements in M&M's SUV market share, product mix, and margins are expected to further boost the company's average selling price (ASP) and profitability. M&M's strong performance in the SUV sector has contributed significantly to its rising return on equity (ROE), which CLSA views as a sustainable driver of profitable growth.
For those looking to buy shares online, M&M's position in the SUV market makes it an attractive option for investors seeking exposure to India's growing automotive sector. With high demand for M&M's models like the Thar ROXX, the company is well-positioned for continued growth.
Tractor industry revival forecast
CLSA also anticipates a revival in the domestic tractor industry starting from FY26, driven by favourable reservoir levels. M&M, a key player in this sector, has shown resilience in maintaining its market share and margins in the tractor segment. The anticipated revival is expected to further strengthen M&M's overall performance, making it an attractive stock for those interested in buying shares online.
Thar ROXX success boosts M&M's growth outlook
M&M's strong performance in the SUV market was recently reinforced by the success of the Thar ROXX model. On October 7, the company reported 1.76 lakh bookings for the Thar ROXX in just 60 minutes, marking the highest first-day bookings for any model in M&M's history. This surge in demand is expected to increase the overall production rate of the Thar franchise, with Morgan Stanley projecting monthly sales to reach 8,000 to 10,000 units. Currently, the three-door Thar has a run rate of 5,000 units per month.
This success in the SUV market further consolidates M&M's position as the third-largest player in India's passenger vehicle market. Investors looking to buy shares online may find this information valuable, as it highlights the company's potential for growth in both the SUV and tractor sectors.
Current trading and stock performance
As of 9:20 am on October 7, M&M shares were trading at ₹3,091, up by 1% from the previous close on the NSE. Despite the overall market sentiment, M&M's stock has continued to rise, reflecting investor confidence in the company's long-term growth prospects.
With a year-to-date rally of 76%, M&M has consistently outperformed the broader market, making it one of the top-performing stocks on the Nifty. Investors looking to buy shares online may consider this stock as a strong contender, particularly given the favourable growth outlook provided by CLSA and other brokerage firms.
Final thoughts
The recent upgrade of M&M shares by CLSA from 'sell' to 'outperform' has resulted in a 2% rise in the stock price, with a new price target of ₹3,400. The brokerage's positive outlook is driven by M&M's strong performance in the SUV and tractor sectors, rising ROE, and anticipated revival in the domestic tractor industry. The success of the Thar ROXX model has further boosted M&M's position in the passenger vehicle market, attracting increased investor interest.
For investors interested in buying shares online, M&M's strong performance, coupled with the optimistic outlook from multiple brokerage firms, makes it an attractive option for those seeking growth opportunities in the Indian automotive and agricultural sectors.
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