On Friday, Axis Capital (NYSE:AXS) Limited updated its outlook on Mahindra & Mahindra Ltd (MM:IN) (OTC: MAHMF) shares, increasing the price target to INR2,740.00 from INR2,530.00. The firm maintained a Buy rating on the stock.
The adjustment comes after Mahindra's adjusted EBITDA for the fourth fiscal quarter showed a 21% year-over-year increase, surpassing the firm's estimates by 8%. This performance was attributed to a 14% outperformance in the farm business and a continued robust performance in the automotive segment.
The management of Mahindra & Mahindra expressed a positive outlook, confirming their forecast for mid to high teen volume growth in the SUV category for the fiscal year 2025.
They also shared plans to aggressively launch new models in both the internal combustion engine (ICE) and electric vehicle (EV) segments in the next five to six years. The company intends to introduce six new ICE SUVs and seven battery electric vehicles (BEVs).
According to Axis Capital Limited, the improving SUV franchise and the successful introduction of new models are expected to contribute to a revaluation of the company's stock.
The firm's optimism is further supported by the anticipated growth in Mahindra's SUV segment, which is a key driver for the company's future performance.
In light of these developments, Axis Capital Limited has raised its core earnings per share (EPS) estimates for Mahindra for fiscal years 2025 and 2026 by 3% and 5%, respectively.
The revised price target reflects this updated earnings outlook and the firm's confidence in Mahindra's strategic direction and growth potential in the coming years.
The analyst's comment highlighted the strong quarterly results and the management's positive guidance, stating, "Improving SUV franchise with continued success of new launches to drive valuation rerating. Increase FY25E/26E core EPS by 3/5%. Revise TP to Rs 2,730 (from Rs 2,530). Reiterate BUY."
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