Why M&M Share Price is Rising

Anand Mahindra, never one to shy away from a captivating tweet, recently surprised his followers with a glimpse into the future.

His post showcased a collaboration between Mahindra Research Valley and Jayam Motors - the creation of a futuristic car, the "buggy," for the sci-fi film Kalki 2898 AD.

While undeniably eye-catching, this fantastical vehicle isn't the real reason Mahindra & Mahindra (M&M) is making headlines. The true story behind M&M's recent investor attention lies in its impressive stock market rally - a 26% increase in just one month.

What is driving the rally?

Let's explore the factors propelling M&M's share price to new heights.

#1 Strong Financial Results

The auto giant reported a net profit of Rs 122.7 billion (bn), reflecting a 7.9% growth compared to the previous year's Rs 113.7 bn. The rise in profit was driven by a healthy rise in income.

The auto company's revenue from operations witnessed a significant increase of 14.6% to reach Rs 1,390.8 billion during FY24.

On a deeper look, the auto sector continued its strong growth trajectory, it was a major contributor to the overall revenue and profit increase. Even in a challenging market, the farm equipment sector managed to gain market share. Mahindra Finance, on the other hand, delivered on asset quality.

M&M announced a dividend payout of 422%, translating to Rs 21.1 per share. This is the highest dividend payout by the company.

#2 Big Investment Plans

M&M unveiled a massive investment plan of Rs 370 billion (bn) over the next 3 years. This cash infusion will be spread across their various businesses, with the auto sector receiving the biggest chunk of the investment.

M&M is bullish on both electric vehicles (EVs) and internal combustion engine (ICE) vehicles, particularly SUVs, which are a steady source of profit. The plan is to aggressively develop both segments.

The auto company aims to invest Rs 140 bn in ICE vehicles by FY25. It will invest Rs 120 bn for the electric vehicle arm, Mahindra Electric Automobile (MEAL) over the next three years.

The farm equipment business, a major cash generator, will get Rs 50 bn. The services sector, encompassing companies like Tech Mahindra and Mahindra Holidays, will also receive Rs 50 bn.

M&M will rely on internal accruals, with each division financing its own share of the investment.

#3 Huge Growth Plans

M&M is ready to ramp up again after streamlining its operations. Following exits from non-core businesses wherein it exited around from 15 business unblocking funds worth 13.9 bn. The company is now laser-focused on its expansion plans.

This includes a significant production capacity increase to 72,000 units by FY26, with a focus on electric vehicles. M&M plans to add 10,000 units of EV production capacity by FY25 and another 8,000 by FY26. The company remains committed to the core SUV segment, with six new models and three refreshes planned by 2030.

A dedicated electric vehicle arm, MEAL, and Mahindra Accelo are slated for a future listing. First Accelo will be listed and then MEAL will be listed in or after 2030.

M&M is ambitious about EVs, aiming for 20% of their SUV sales to be electric by 2027.

Looking beyond India, M&M plans to leverage its domestic SUV success to enter new markets like Australia, South Africa, and Chile. They're targeting a 15% market share in these regions.

Existing subsidiaries like Tech Mahindra and Mahindra Finance will also see a renewed focus on maximising their potential. The auto and farm businesses that account for a lion's share of revenue will also be central to the next phase of growth.

How M&M Share Price has Performed Recently

In the past month, M&M share price rallied more than 25%. In 2024 so far, it is up 52.2%.

The stock surged 66.9% in the past six months and around 103.2% in the year gone by.

The stock touched its 52-week high of Rs 2,616.8 on 23 May 2024 and a 52-week low of Rs 1,257.4 on 25 May 2023.

About Mahindra & Mahindra

Mahindra & Mahindra (M&M) is the flagship company of the Mahindra group, which consists of diverse business interests across the globe.

It operates through the following segments: automotive, farm equipment, and others. The automotive segment comprises of sale of automobiles, spare parts, and related services.

The farm equipment segment involves the sale of tractors and spare parts. The others segment includes agri, construction equipment, powerful, and spares business units.

It is one of the most reputed brands in India for automobiles, and since its inception in 1945, the company has been going strong, with its cars among the most trusted and most reliable cars in the market.

For more details about the company, you can have a look at Mahindra & Mahindra's factsheet and quarterly results on our website.

You can also compare Mahindra & Mahindra with its peers.

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