Mahindra & Mahindra Ltd. has reported an impressive 22% increase in standalone net profit, reaching ₹2,437.14 crore for the quarter ending March 31, 2025. This robust performance was underscored by strong revenue and operational metrics, showcasing the company’s resilience and growth potential. Leading financial institutions such as Goldman Sachs, BofA, Macquarie, and Citi have responded positively, with recommendations varying from “buy” to “outperform.”

Key Highlights from the Brokerages

Margin Strength

Brokerages have universally praised Mahindra’s margin resilience, particularly within its farm sector. The automotive margins remained stable, with the Internal Combustion Engine (ICE) SUV segment achieving a notable 10% EBITDA margin.

SUV Growth Projections

Mahindra’s projection for SUV volumes to grow in the mid-to-high teens for the upcoming fiscal year significantly surpasses industry norms, which are expected to be in the 1-2% range. BofA described this as the company’s “biggest positive surprise.” This growth is fueled by the successful launches of models like the Thar Roxx and XUV 3XO, along with capacity expansions and the introduction of new electric vehicle (EV) models. The company plans to boost SUV production capacity by 12% this financial year and an impressive 23% the following year.

EV Sector Making Progress

The EV division reached EBITDA breakeven during its initial delivery quarter, a result that BofA deemed “better than anticipated.” Goldman Sachs highlighted that the MEAL business is already EBITDA-positive without relying on Production-Linked Incentives (PLI), forecasting breakeven within the next 12 to 18 months. Macquarie anticipates that the PLI scheme, along with reductions in cell prices and increased localization, could enhance EV margins by 4-5%.

Farm Business Margins

The tractor segment achieved an impressive 19.4% margin in the quarter ending March, thanks to a favorable product mix, decreased input costs, and positive trends in regions like South and West India, according to Citi.

Challenges Identified by Brokerages

Decline in Non-Operating Income

Despite the impressive EBITDA results, Citi noted that the profit after tax only slightly exceeded expectations due to lower non-operating income, partly resulting from write-offs in the farm equipment division, along with increased depreciation costs.

Cautious Outlook on SUV Growth

While Mahindra’s management is optimistic about high SUV growth, Citi has adopted a more conservative stance, forecasting an 11% annual growth instead of the anticipated mid-to-high teens.

Early Stages of EV Profitability

Though the EV segment is showing promising signs, both Citi and Macquarie acknowledged that operating income remains negative, primarily due to depreciation. Future profitability will largely depend on PLI approvals, ramping up production volumes, and improving product mix.

Sustainability of Farm Margins

Macquarie raised concerns that some factors contributing to farm margin growth, such as favorable currency rates and input costs, may not hold steady throughout the current fiscal year, although annual margins are expected to improve overall.

Conclusion

In summary, while Mahindra & Mahindra navigates short-term challenges, brokerages remain optimistic about the company’s ability to deliver consistent earnings growth. With a solid foundation in both the automotive and farm sectors, Mahindra is well-positioned for future success.

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