M&m shares hit new high despite market weakness. Should you buy?

Mahindra & Mahindra (M&M) shares continued to rise with the shares reaching a new high of $1,033 each on the BSE in early trading on Tuesday, even as the benchmark Sensex fell more than 300 points.

The automaker reported that its independent profits increased fivefold in $Rs 1,192 crore for its fourth quarter ending 31 March 2022. The Mahindra Group company’s revenue grew by 28% to $Rs 17,124 crore in the period under review as compared to $Rs 13,356 crore in the March quarter of 2020-21.

“While the outlook for tractors has improved, we expect the auto business to be the key driver of growth over the next two years. Valuations are still at a substantial discount to their five-year average, reflecting weakness. in the tractor cycle,” he said. Motilal Oswal in a note.

The brokerage house has maintained its buy tag on M&M shares with a price target of $1,150 each. Auto stocks have risen about 10% in the past five trading sessions.

Analysts at PhillipCapital have upgraded the stock’s rating to Buy and value the stock at $1,140 as FES subs reported positive PBIT for 7 consecutive quarters, and also the company was able to recover lost market share in the Farm segment for FY22 to levels of 40%.

“The automotive business is doing well thanks to new launches and better margins. Car profitability has also improved due to new launches, structural cost savings and a better variant mix despite the drag on the MHCV business. Increasingly, the anticipated cooling of RM prices and higher operating leverage (new launches and supply problems), should improve margins for both the agricultural and automotive businesses.

Meanwhile, the local auto giant said on Monday that it plans to launch the all-electric version of its XUV 300 SUV in the first quarter of next year.

The company also announced that it will introduce its electric vehicle business strategy, ‘Born Electric Vision’ of the EV concept in August this year. The company plans to launch 13 SUVs by 2027, eight of them will be electric SUVs.

The Mumbai-based company recently partnered with Volkswagen to explore the use of the latter’s modular electric drive array (MEB) components that can be used in its electric cars.

The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of the Mint.

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