Mahindra & Mahindra (MM IN): Buy: Cost pressure and supply constraints drag down performance

研报英文原文证据摘录

Mahindra & Mahindra (MM IN): Buy: Cost pressure and supply constraints drag down performance

31 July 2026

Mahindra & Mahindra (MM IN) Equities Automobiles

Buy: Cost pressure and supply constraints drag down

performance India

◆ Auto margins adversely hit by commodity cost inflation and MAINTAIN BUY

hedging losses; supply constraints limited growth

TARGET PRICE (INR) PREVIOUS TARGET (INR)

◆ Partial monsoon recovery improves rural sentiment;

4,200.00 4,200.00 management expects mid-single-digit tractor growth in FY27

◆ Near-term commodity cost uncertainty remains key risk for SHARE PRICE (INR) UPSIDE/DOWNSIDE

the stock; retain Buy with TP unchanged at INR4,200 3,283.70 +27.9%

(as of 30 Jul 2026)

A quarter of turbulence: M&M reported Auto segment EBIT margin of 7.1%, MARKET DATA

Market cap (INRm) 3,944,055 Free float 77%

down 240 bp q-o-q, and Tractor EBIT margin of 18.5%, down 90 bp q-o-q. Overall, Market cap (USDm) 41,233 BBG MM IN

margins were adversely impacted by commodity cost inflation, and Auto margins 3m ADTV (USDm) 104 RIC MAHM.BO

were further impacted by a 85bp hedging loss. Production was also disrupted, due to FINANCIALS AND RATIOS (INR)

a fire at a key supplier’s plant and heavy rainfall in Maharashtra. Management Year to 03/2026a 03/2027e 03/2028e 03/2029e

remains uncertain for 2Q about the ongoing impact of commodity costs on margin, HSBC EPS 130.14 136.81 160.18 179.76 HSBC EPS (prev) 130.14 137.69 160.92 179.29

but expects some improvement driven by reversal of a portion of hedging losses and Change (%) 0.0 -0.6 -0.5 0.3

Consensus EPS 129.66 143.08 161.99 176.10

the benefit of price hikes. In 1Q, sales of higher-margin, top-end variants of XUV PE (x) 25.2 24.0 20.5 18.3

7XO were lower and this may improve in 2Q as supply constraints ease.