Shares of Mahindra & Mahindra Ltd. (M&M) opened with gains of 1% on Friday, November 8, after the automobile and tractor manufacturer reported a healthy set of September quarter earnings.

Mahindra & Mahindra have raised the tractor industry guidance in FY25 to 6-7% from 5% earlier. This implies a H2FY25 growth of 13-14% also in tractor segment. The company has achieved its highest-ever market share of 42.5% in Q2FY25.

At the conference call, the management exuded confidence on auto demand, saying M&M witnessed strong retail growth during the festive period and expects the momentum to continue in the second half on the back of positive response to new model launches.

As a result, dealer inventory has now reduced to below 30 days.

The management has also guided for a growth rate of mid to high teens (15-18%) in its UV segment for FY25.

M&M’s earnings, however, have elicited a mixed response from the brokerages.

About 88% of the 41 analysts that track M&M have maintained their ‘Buy’ rating on the counter after its second quarter earnings. The highest projected price targets of ₹3,700 per share on the stock are from Jefferies and Nuvama for the next 12 months.

Jefferies has maintained a ‘Buy’ rating on M&M, and raised its price target to ₹3,700 per share, which implies a potential upside of nearly 28% from Thursday’s closing levels.

The foreign brokerage mentioned that demand for M&M’s tractors is picking up after a period of 1.5 years. The company’s expanding portfolio is fueling strong growth in SUV volumes, and it is consistently gaining market share across various segments.

Jefferies has raised its FY24-27 earnings per share forecast by 3-4%, projecting a 19% compound annual growth rate in EPS over this period.

Citi has maintained a ‘Buy’ rating on M&M, though it has lowered the price target to ₹3,520 from ₹3,590 per share earlier. The company’s second quarter results exceeded expectations, with both the farm and auto segments delivering positive surprises.

Following strong retail volume growth during the festive season, the demand outlook remains positive.

However, the brokerage said that there may be some short-term margin pressures related to the launch of battery electric vehicles (BEVs).

On the flip side, Emkay has downgraded M&M to ‘Reduce’ from its earlier rating of ‘Add’.

The brokerage has also revised its price target to ₹2,700, saying it sees M&M outperforming in the near term, but expects a muted 4% passenger vehicle growth in FY25E-27E amid persistent industry challenges.

Emkay also mentioned that the best of the SUV launch-cycle is now behind.

Out of the 41 analysts that have coverage on M&M, 36 of them have a ‘Buy’ rating on the stock, four have a ‘Hold’ rating, while one has a ‘Sell’ recommendation.

Shares of Mahindra & Mahindra have rallied over 70% so far in 2024 and nearly 95% in the last 12 months.