M&M hits 52-week high on receiving PLI eligibility certificate

Mahindra and Mahindra Ltd (M&M) shares gained over 3 percent to a 52-week high of Rs 1,450 on June 30, a day after becoming the first company to receive the eligibility certificate under the production-linked incentive (PLI) scheme for automobiles.

This will enable the company to avail subsidies from the government under the Rs 25,938-crore scheme, aimed at boosting domestic production, job creation, and driving economic growth.

M&M has been on a positive run with the stock gaining 15 percent in the last six months on the back of robust growth prospects amid macroeconomic uncertainties.

JP Morgan in its May report said that M&M has achieved profitable growth while maintaining capital discipline, as reflected in its consolidated return on equity (ROE) figures. In FY23, the ROE stood at 20 percent, an improvement compared to the 4.4 percent recorded in FY21. Looking ahead to the medium term (FY24-26), JP Morgan expects the company’s focus to be on expanding its scale and solidifying its market leadership in core segments.

Brokerage firm Choice Equity anticipates positive growth in the upcoming quarters. The firm projects a favourable trajectory for the utility vehicles (UV) business due to its successful product launches in the segment, robust order book, and increased production capacity.

The farm equipment vertical is expected to experience growth supported by a series of forthcoming launches across different categories in the tractor segment.

M&M is expected to outperform the industry due to its dominant position in the market and extensive reach in rural areas. This is evident from its achievement of a 1.2 percent increase in market share in FY2023, bringing it to 41.2 percent, broking firm Sharekhan said in its report.

M&M announced a standalone net profit of Rs 1,549 crore in the quarter ending March 2023, representing a growth of 22 percent compared to Rs 1,268 crore in the same quarter of the previous year.

The company’s revenue from operations in Q4FY23 jumped 31 percent, reaching Rs 22,571 crore compared to Rs 17,237 crore in the previous year.

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