As Q4 Revenue Beats Estimates, M&M Share Price Soars to a 52-Week High; Should You Buy?

M&M Shares: Mahindra and Mahindra share prices increased on Monday as the automaker spearheaded an increase of more than 4% on the BSE & NSE intraday trade. On the BSE, the share price of Mahindra and Mahindra increased 4.30 percent, or 41 points, to Rs.994.20. The share price increased 4.41 percent, or 42.05 points, on the NSE. The stock has increased for the last three sessions in a row and is up more than 16% year to date (YTD).

On Saturday, the corporation disclosed earnings for the fourth quarter of the fiscal year 2021–2022 that were marginally above estimates (Q4FY22). Additionally, the business increased its revenue market share leadership in the SUV class. On a year-over-year (YoY) basis, revenue increased by 28.2% to Rs 17,124 crore. Although the margin decreased by more than 300 basis points, profits before interest, tax, depreciation, and amortization (EBITDA) decreased in the quarter ending in March.

M&M reported that its standalone revenue from the auto and farm sectors reached a record high of Rs 55,300 crore for FY22, up 29% from the prior year. Additionally, it stated that the company's auto division produced the largest quarterly UV (utility vehicle) volumes ever in Q4 with an increase of 42% YoY.

Rajesh Jejurikar, Executive Director of M&M, commented on the company's leadership in the SUV revenue market share: "It has been a really rewarding experience to watch our SUV revenue market share come back to a number one position. And because our items' average selling prices are significantly higher than those of most of our rivals, we are concentrating on revenue market share. When examining our share, we must keep in mind that we compete in a different segment.

What Should Investors Do?

"M&M's net realization increased, and volumes expanded by 13% YoY in the fourth quarter of FY22. Subs, joint ventures, and associate contributions got better with time. Farm-related subsidiaries reported a positive EBIT for the eighth quarter in a row. The greatest quarterly UV volumes ever were produced in 4QFY22 due to enhanced semiconductor supplies, according to domestic brokerage Motilal Oswal, which also kept its buy rating on M&M stock.

With a target price of Rs 1,145, Morgan Stanley maintains a bullish outlook on the stock in light of the company's Q4 profits exceeding expectations. It sees risks to the upside for tractor volume expectations, a significant stock driver for M&M. With a target price of Rs 1145 per share, it stated that the SUV industry turnaround and relatively low multiples have allowed the brokerage to maintain an Overweight posture (20 percent upside).

According to Jefferies, M&M's Q4 volumes increased 13% year over year, but its Ebitda decreased 1%. With a target price of Rs 615, it has kept the underperforming rating on the stock.

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