Mahindra & Mahindra shares may rally up to 22%, brokerages say after Q2 results. Should you buy, sell or hold?

Mahindra & Mahindra (M&M) shares could gain as much as 22%, according to global brokerages that turned increasingly bullish after the automaker’s September-quarter results. Nomura and Nuvama both reiterated their ‘Buy’ ratings on the stock, citing robust SUV demand, strong farm equipment growth and expanding profit margins as key drivers for the next leg of the company’s growth.

Nomura lifted its target price on M&M to Rs 4,355 from Rs 4,066, implying a potential upside of 21.6% from Tuesday’s closing level of Rs 3,581.55 on the BSE. Nuvama maintained its ‘Buy’ call with a Rs 4,200 target price, suggesting an upside of nearly 17%.

Nomura stays bullish on growth momentum

Nomura, in its post-results note, called M&M its “top pick” in the auto sector, projecting “industry-leading growth to continue” over the next three years. The brokerage expects SUV volume growth of 18%, 11%, and 7% over FY26–28, backed by upcoming launches across battery electric, hybrid, and internal combustion engine models.The brokerage highlighted that the automaker’s Production-Linked Incentive (PLI) approval for battery electric vehicles offers a “key strategic edge over peers.” Tractor volume growth estimates were also raised to 12% and 5% for FY26 and FY27, respectively. Nomura sees EBITDA margins rising to 14.4%–15.3% during FY26–28, with electric vehicle margins reaching double digits by FY28 as the full portfolio comes under the PLI benefit.

Nuvama sees sustained earnings momentum

Nuvama echoed similar optimism, expecting M&M to deliver revenue and earnings CAGR of 15% and 19%, respectively, over FY25–28. “Auto segment revenue CAGR is expected at 15% (FY25–28) on robust demand and new launches, and Farm segment CAGR at 13% driven by market share gains and supportive policies,” the brokerage said.It added that the company’s return on invested capital (RoIC) is likely to remain above 60%, supported by steady margins in both its Auto and Farm divisions. Nuvama values M&M at 25x Sep-27E core EPS and assigns Rs 942 per share for subsidiaries and investments, maintaining its Buy rating.

Solid fundamentals across segments

M&M reported a 28% year-on-year rise in consolidated profit after tax to Rs 3,673 crore for the July–September quarter, while revenue from operations climbed 21.7% to Rs 45,885 crore.

The automaker continued to dominate across key segments—holding a 25.7% share in SUVs, 53.2% in light commercial vehicles, 43% in tractors, and 42.3% in electric three-wheelers. The company’s annualised return on equity stood at 19.4%.

The Auto segment reported total quarterly volumes of 2,62,000 units, up 13% year-on-year, with standalone PBIT rising 14% to Rs 2,281 crore. In the Farm segment, PBIT surged 48% to Rs 1,684 crore, with margins improving by 220 basis points to 19.7%.

Mahindra Finance, the group’s financial arm, recorded a 45% jump in profit after tax, while Tech Mahindra’s EBIT margin expanded by 250 basis points to 12.1%, contributing to a resilient consolidated performance across the Mahindra Group.

With Nomura and Nuvama both forecasting sustained growth, margin expansion, and steady market share gains, Mahindra & Mahindra remains firmly on the radar of long-term investors. The stock’s recent momentum, coupled with a potential 17–22% upside, signals that M&M’s growth engine, driven by SUVs, EVs, and tractors, may still have significant mileage left.

Also read | M&M Q2 Results: PAT surges 28% YoY to Rs 3,673 crore, revenue jumps 22%(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)