Buzzing Stock | Why CLSA sees nearly 40% upside in M&M

CLSA expects Mahindra & Mahindra (M&M) to appreciate nearly 40 percent over the next 12 months on its electric vehicle (EV) plans and easing production concerns.

M&M is reportedly trying to raise $1-$1.3 billion from global investors for its EV subsidiary, EV Co. The subsidiary was set up last June with M&M investing $250 million and raising another $200 million from development finance institution British International Investment.

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CLSA has set a target price of Rs 1,619 with supply-chain bottlenecks easing and the company planning multiple EV launches. Analysts noted that there was a focused supply-chain management for EVs and that mass-market electric SUC may be in the works.

Electric tractors are only for niche applications, they said. The brokerage had earlier in the month upgraded M&M from ‘outperform’ to ‘buy’.

The stock opened at Rs 1,169.6, nearly 1 percent higher than the previous close of Rs 1,160.15, on the BSE. It was trading at Rs 1,172 at 9.20am.

A few days ago, ICICI Direct had given a ‘buy’ call on the stock with a target price of Rs 1,665. The brokerage’s analysts gave EV proactiveness as one of the reasons, besides the company’s smart capital allocation and differentiation in the UV segment.

In an an earlier interview to Moneycontrol, M&M’s Executive Director (Auto and Farm Sector) Rajesh Jejurikar had said that the company hopes to make up to 30 percent of its portfolio electric by 2027.

M&M has been taking quick strides in the EV game. In August 2022, the company unveiled its fully electric architecture INGLO and its first fully electric four-wheelers under the brand Born Electric in the UK. The BE models were showcased in Hyderabad this year.

This February, the company also signed an MoU with the Telangana government to set up an EV manufacturing facility, attached to its current facility in Zaheerabad. It plans to manufacture three-wheelers and four-wheelers to cater to the last-mile mobility segment.