Target: ₹1,470
CMP: ₹1,248.60
Mahindra & Mahindra’s wholesales were in line with our estimates at 79,900 units (v/s est 77,300 units), up 39 per cent y-o-y. M&M’s tractor volumes (above est.) grew 27 per cent y-o-y to 23,200 units (v/s est. 20,500 units).
We have factored in 9 per cent volume growth for FY23, implying a 5.6 per cent residual decline or 22,900 units per month.
UV volumes (in line) grew 41 per cent y-o-y to 50,750 units (est. 51,500 units). Domestic passenger UV sales rose 60.5 per cent y-o-y, whereas pickup/SCV volumes posted 25 per cent growth. We estimate UV volumes to grow 47 per cent in FY23, with a residual growth rate of 18 per cent or a monthly run-rate of 56,300 units.
Three-wheeler volumes increased 2x YoY to 5,050k units (v/s est. 4,500). We estimate it to rise 81 per cent in FY23, with a residual growth rate of 26 per cent or a monthly run-rate of 4,500 units.
Hemant Sikka, President of Farm Equipment Sector, M&M, said: “On the back of strong Rabi sowing, good kharif procurement and likely exports of wheat, sentiments remain upbeat in the farming sector, leading to strong demand for tractors and farm implements.”
The stock trades at a core PE of 11.4x FY24E S/A EPS and 2.1x core P/B. Maintain Buy.