Shares of Mahindra & Mahindra Ltd (M&M) witnessed a notable 4% rise on Wednesday’s trading session following an upgrade from the foreign brokerage UBS, which shifted its rating on the stock to ‘Buy’.
The upgrade comes as UBS identified a 19% share price correction over the past month due to EV-related news flow as an overreaction.
According to UBS, domestic SUVs account for 50% of M&M’s EBITDA, making the current risk-reward ratio favorable. The brokerage anticipates M&M’s volumes to grow 9% in FY26, driven by the strong demand for SUVs and the launch of new electric vehicles (EVs). Despite the 30,000 bookings for recently launched EVs falling short of expectations, UBS considers the number robust, given the context of January 2025/2024 EV volumes in India, which stood at 12,000/98,000 units.
UBS also projects more product intervention in the SUV segment from M&M in FY26. Additionally, the demand for farm equipment (FES), which constitutes 40%/30% of EBIT/SoTP, remains robust with no imminent technological or regulatory disruptions.
On the subject of Tesla’s potential entry into the Indian market, UBS sees limited impact on M&M. The Model 3, Tesla’s highest-selling model in the US, is priced at $35,000 (Rs 31 lakh) and deemed unsuitable for the Indian market due to its low ground clearance and sedan form factor. The Model Y, which is more relevant to India, is expected to have a landing price of Rs 50-60 lakh with a 15% customs duty, compared to XEV 9e’s top-end variant price of Rs 33 lakh.
UBS has upgraded M&M to ‘Buy’ with a revised price target of Rs 3,300, down from the previous target of Rs 3,460. The brokerage continues to value M&M’s auto business at 15 times 12-month forward EV/EBITDA, a 17% discount to the implied EV/EBITDA multiple for Maruti at its target price.
