2 weeks Ago By CNBCTV18
The sector index Nifty Auto has seen a growth of 35% in a year and one of the key stocks in the pack that has outperformed is Mahindra and Mahindra which has given a return of more than 80% during the same period. So far in 2024 (year-to-date), M&M shares are up 76%. NSE In its latest note on December 3, Citi said it expects a further upside of more than 16% in the stock from the closing price of the previous session.
The brokerage has set the target price at ₹3,520 with a buy rating. Citi maintained the buy call on M&M shares even as it is seeing some slowing in pace of growth sequentially. It is of the view that volatility in volumes could also reflect fluctuations in inventory.
The brokerage’s remark came after a day after the automaker reported its monthly sales data for November . While there has been growth of 12% in overall sales on a year-on-year basis, a decline of 18% was registered when compared with overall sales of the previous mon5th of October. The brokerage, however, pointed to the management’s comments about the likely positive cues for the farm segment in the coming months.
M&M has said that healthy reservoir levels and higher minimum support price (MSP) augur well for key rabi crops. It said that farmer sentiments are also positive, Citi said, adding that good progress in rabi crop sowing and healthy harvest may support demand for tractors. The statement came even as Mahindra’s Farm Equipment Sector recorded monthly domestic sales of 31,746 units, as against 31,069 units during November 2023, an increase of only 2%.
Total tractor sales, including domestic and exports, during November were at 33,378 units, as against 32,074 units for the same period last year with exports for the month at 1,632 units, a growth of 62% over last year, according to the company’s statement. Hemant Sikka, President – Farm Equipment Sector, M&M explained that the marginal decline in the industry is due to a shift in the festive season of Diwali and Dhanteras as compared to the previous year. “With very good reservoir levels and higher MSP for key Rabi crops, farmer’s sentiments are positive and cash flows are healthy.
Good progress in Rabi sowing and a good Rabi crop is expected to boost tractor demand further in the coming months,” Sikka said. On the other hand, M&M sold 46,222 SUVs in the domestic market, 16% higher than the same month last year. Overall sales, including exports, came in at 47,294 vehicles.
The domestic sales for commercial vehicles stood at 22,042. Mahindra Auto's exports in November saw a 52% jump to 2,776 units. M&M shares traded 0.
21% lower at ₹3,010 on NSE at 10:17 am. Track latest stock market updates on CNBCTV18.com’s blog here.
