M&M Shares Gain 14% in 4 Days as Investors Cheer Scorpio-N Launch; Should you Buy, Sell or Hold?

M&M Share Price: Mahindra and Mahindra’s (M&M) share price rose around 4 per cent in a weak market a day after (on Tuesday) the carmaker launched “the bid daddy of SUVs”, the All-New Scorpio-N. For now, M&M has only announced prices for manual transmission variants starting at Rs 11.99 lakh and going up to Rs 19.49 lakh. Pricing for the automatic variants as well as the four-wheel-drive variants will be announced on July 21, as per release. The company is unveiling the new product in South Africa and Nepal simultaneously. And, it intends to introduce this vehicle in Australia and New Zealand shortly.

M&M Stock Price History

On Tuesday, the scrip hit a record high of Rs 1,121 on BSE. It has been gaining for the last four days and has risen 14 percent during the period.

A few analysts said M&M could be a key beneficiary of the strong model cycle in utility vehicles (UV), as they put price targets on the stock up to Rs 1,315, suggesting up to 17 per cent potential upside on the counter.

What Should Investors Do?

Nomura said the All-New Scorpio-N is another potential winner and it could incrementally add a 10-15 percent upside to overall volumes in the utility vehicle space during FY23-24.

M&M’s utility vehicle market share has been improving and has risen to 17 percent in May 2022 from 13-14 percent in FY21-22.

Emkay Global said the Scorpio-N launch on July 30 would further support bookings. Considering expectations of a staggered improvement in chip supplies and a large order book, it has raised volume estimates for M&M by 3 per cent each for FY23 and FY24. This brokerage has increased its FY23/FY24 EPS estimates by 6 per cent due to an increase in margin assumptions.

“We have a Buy rating with a target of Rs 1,250 from Rs 1,150 earlier, based on 16 times core June 2024 EPS (DCF-based) and the value of investments at Rs 482 per share. We increase the valuation multiple to 16 times from 14, factoring in higher revenue growth and margin assumptions in our DCF model,” Emkay said.

ICICIdirect, in a note, said M&M is steadily transforming with a pipeline of interesting launches in the electric PV and LCV front amid a change in technology landscape in the auto space.

M&M plans to unveil its born electric strategy on August 15, it said, while retaining its positive view on automaker amid healthy demand prospects across its product profile, focus towards capital efficiency & EV proactiveness. The brokerage has a target of Rs 1,315 on the stock.

Ravi Singh of Share India said the popularity of SUVs among customers and Scorpio N’s advanced features at a competitive price, the global launch might prove as a game-changer in the SUV market. He said the scrip has already started showing enthusiasm and that it may touch the level of Rs 1,250 soon.

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