Target: ₹4,289
CMP: ₹3,533.80
Mahindra & Mahindra, or M&M’s Q3FY26 standalone EBITDA rose 19 per cent year on year to ₹5,290 crore, which was in line with our estimate, but 4 per cent below Bloomberg (BB) consensus estimate. Normalised PAT rose 31 per cent to ₹4,000 crore due to higher other income and flattish depreciation. The ₹590-crore charges in respect of global farm equipment business hit reported PAT.
The management indicated that GST cut is benefiting sports utility vehicle (SUV) premiumisation and entry-level car customers. It indicated that XUV7XO launch has garnered 70 per cent of bookings for the top two variants. Improvement in the internal rate of return for commercial segments (LCV, tractor & 3W) post-GST cut is driving the company’s volume. While El Nino fears are a cause for concern, the precise timing of its landing will be key to gauge the impact on FY27F tractor demand.
We have raised sales volume estimates by 5-7 per cent for FY26F-27F to factor in new vehicle launch momentum and capacity build-up. We build in 8 per cent tractor industry volume growth for FY27F.
With current mark-to-market of investment in subsidiaries, we raise the value of subsidiaries to ₹709/share (from ₹654 earlier). The standalone entity is valued at 22x one-year forward P/E, marginally below the +1SD level to reflect concerns over rainfall, leading to a SOTP-based higher target price of ₹4,289 (₹4,157 earlier) and maintain Add rating on the stock.
Published on February 13, 2026
