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M&M is one of the largest and diversified multinational corporations originating in India which deals with agricultural and construction equipment, automotive information technology, trade, finance, logistics and real estate. The company was established in the year 1945 and now it is one of the most prominent companies in the world which is making its presence in many disciplines.
It runs business across nine strategic areas to make M&M one of the most successful conglomerates in the world today. The main business areas are automotive and farm equipment sectors though it operates in sectors like information technology, financial services, steel trading and processing, infrastructure, hospitality and logistics etc.
M&M’s strategic acquisitions, including the 2013 acquisition of Navistar Group’s majority holding in Mahindra Navistar Automotives Ltd and Mahindra Navistar Engines Pvt Ltd have built up M&M’s market standing and diversified its product offerings.
The vehicle and agriculture equipment maker claimed healthy numbers for the second quarter when it posted a 35% YoY rise in consolidated net profit to ₹3,171 crore from ₹2,348 crore in the corresponding quarter of the prior fiscal. Total consolidation of revenue from operations also increased by 10 % from ₹ 34281 crore in Q2 FY24 to ₹ 37689 crore.
M&M’s standalone net profit increased to ₹3,840.88 crore YoY, and revenue from operation was up 12% YoY to ₹28,919 crore.
The automotive segment recorded the highest quarterly volumes. With a 9% YoY increase to 2,31,038 units, while tractor sales rose 4% YoY to 92,382 units. The Farm Equipment Segment also delivered its best ever Q2 market share with 42.5%. On the operational front, the EBITDA came in at ₹3,908 crore, a whopping 30% YoY increase and EBITDA margin expanded by 190 bps to 14.2%.
Automotive Segment: Automotive division revenues at M&M were up 14 % YoY ₹ at ₹21,110.28 crore and operating profit was higher by 17.37% ₹ at ₹2055.98 crore.
Farm Equipment Segment: Revenue grew 9.75% YoY to ₹6,496.81 crore, and EBIT saw a 20% YoY jump to ₹1,136.22 crore.
M&M exhibits a strong market performance, with a market capitalization of ₹3.47 trillion and an enterprise value of ₹4.30 trillion. The company's trailing P/E ratio stands at 28.59, with a forward P/E ratio of 30.21, reflecting positive investor sentiment and future growth expectations.
M&M’s price-to-sales ratio (ttm) is 2.36, and its price-to-book ratio (mrq) is 4.92, indicating a premium valuation. The enterprise value-to-revenue ratio is 3.01, while the enterprise value-to-EBITDA ratio is 14.24, highlighting efficient operations relative to its market value.
M&M has demonstrated solid profitability with a profit margin of 7.66%, generating a net income attributable to common shareholders of ₹110.43 billion (ttm). The company’s diluted EPS for the trailing twelve months is ₹101.20. M&M holds total cash of ₹262.23 billion (mrq), providing strong liquidity. However, its total debt-to-equity ratio stands at 140.63%, indicating a relatively high leverage level in its capital structure.
The data below highlights the impressive performance of M&M stock compared to the benchmark index, S&P BSE SENSEX across various time horizons.
Year-to-Date (YTD) Return:
M&M.NS: +73.28%
S&P BSE SENSEX: +10.03%
M&M.NS has brought 73.28% of the total profit compared to 10.03% of the SENSEX. This implies a positive growth rate of the stock in the current year which may be triggered by a positive industry trend or some unique characteristic of this company.
1-Year Return:
M&M.NS: +102.51%
S&P BSE SENSEX: +22.40%
In the last one year M&M.NS has given a return of as high as 102.51%, whereas SENSEX has given only 22.40 %. This kind of growth means that M&M.NS has beaten market average all through probably as a result of certain measures, improved consumers’ demand drives or favorable conditions within its operations.
3-Year Return:
M&M.NS: +254.13%
S&P BSE SENSEX: +32.33%
In the case of stock returns in India over a three-year period, M&M.NS has witnessed a whopping 254.13% against the SENSEX growth of 32.33%. Such a long term growth indicates the good solidity of the stock and could indicate successful transition to other markets which makes the stock a commending investment in the medium run.
5-Year Return:
M&M.NS: +440.92%
S&P BSE SENSEX: +95.52%
This therefore portends that all along M&M.NS had been achieving growth and the ability to outperform the market, something that has benefited long-term investors far better than the norm.
In all the three periods, M&M.NS delivers much better returns than S&P BSE SENSEX. Thus, the constancy of such outperformance suggests that M&M.NS is perhaps reaping from good market positioning, best practices or favorable industry traits.
These returns indicate to potential investors that M&M.NS may be a valuable addition to a portfolio because of growth stocks. But as with all the investment opportunities, it would be crucial to look through the fundamentals and the long-term viability of those kinds of growth rates.
The data showcases M&M Earnings Per Share (EPS) results over four recent quarters, highlighting that the company has consistently beaten EPS estimates in each of the reported quarters. Here’s a closer look
Q3 2022
Result: Beat
EPS: +$2.82
For the fiscal third quarter of the year 2022, M&M.NS has recorded an EPS of 2.82, while the expectation was lower.
Q4 2022
Result: Beat
EPS: +$3.23
Q1 2023:
Result: Beat
EPS: +$3.59
Q2 2023 (Estimate):
EPS Estimate: +$16.57
Looking at the second quarter of 2023 EPS estimate of $16.57 is high suggesting that the market anticipates growth in the EPS. It can be for expected enhancement in businesses cash flows in future, increase in the market size or increase in the business profit margin.
M&M.NS has shown a strong track record of beating EPS expectations across recent quarters, suggesting robust financial performance and effective management strategies. The high EPS estimate for Q2 2023 sets high expectations and signals market confidence in the company’s growth trajectory. Investors may view this consistent outperformance as a positive indicator of the company's potential for continued profitability.
M&M.NS has been trading in a bullish trend, with prices consistently climbing. However, at the end of October, the price encountered resistance at a confluence of an ascending trendline and horizontal support, resulting in a temporary pullback.
Currently, the price is moving upward again, with the next target set around the recent high of 3222, indicating potential for further gains if it can break past this resistance level.
Mahindra & Mahindra Ltd (M&M) continues to demonstrate impressive financial performance, with its Q2 FY25 results showing significant growth in net profit, revenue, and operational efficiency. With a diversified business portfolio spanning various sectors, including automotive, farm equipment, IT services, and financial services, M&M has positioned itself as a resilient and forward-looking multinational corporation.
The company’s strategic acquisitions, strong market share gains, and consistent outperformance against the broader market, such as the S&P BSE SENSEX, highlight its robust growth trajectory. The positive financial outlook, including solid profitability and cash flow, coupled with its strong valuation metrics, further supports M&M’s potential for continued success. Looking forward, M&M is expected to maintain bullish momentum, with steady growth across multiple business segments, offering promising returns for long-term investors.
