Bookings for Mahindra’s XUV 3XO will open online and at dealerships on May 15, with deliveries starting on May 26.
Mahindra and Mahindra’s shares surged to a record high on April 30, following the unveiling of its compact SUV XUV 3XO. M&M’s stock climbed 5% to ₹2,169 on the NSE, emerging as the leading Nifty 50 gainer, and outpaced the Nifty Auto index, which rose 2%.
Over the past year, the stock delivered a 75% return to investors, surpassing the Nifty 50’s 25% increase. M&M’s market capitalization has reached ₹2.67 lakh crore.
What factors contribute to the rally in M&M stock?
1) The surge in auto stock on Tuesday follows Mahindra’s unveiling of the XUV 3XO, a facelift of the 2024 XUV300, priced from ₹7.49 lakh (ex-showroom), with five trims featuring a revamped design, new cabin, additional features, and updated automatic gearbox, receiving positive response from investors due to competitive pricing ranging from ₹7 lakh to ₹15 lakh.
2) M&M is strengthening its position in the high-growth utility vehicle segment, especially in the compact SUV segment, constituting 50% of UV volumes and 30% of overall four-wheeler volumes, with market share increasing from ~8% in FY21 to 16.3% in FY24.
3) Brokerages express bullish sentiment on the stock, with Nomura suggesting that the XUV 3XO launch could potentially double sales, offering best-in-class features and the potential to increase sales by 50-100% to 6,000-8,000 units per month.
It continues to endorse M&M as the prime choice in the OEM sector, expecting re-rating from the current 10.5x FY26F EV/EBITDA, lower than peers’ 15x EV/EBITDA, driven by new products.
Investec also labels M&M as its top selection in the auto OEM sector, citing robust earnings growth propelled by successful product launches. It finds the core valuation appealing at 20x FY26E EPS and reiterates its buy recommendation.
Sales trend of M&M in recent months:
M&M’s UV monthly sales have consistently grown over the past 10 months, increasing from 36,205 in June 2023 to 40,631 units in March 2024, as indicated by the following figures:
June 2023: 32,588
July 2023: 36,205
August 2023: 37,270
September 2023: 41,267
October 2023: 43,708
November 2023: 39,981
December 2023: 35,174
January 2024: 43,068
February 2024: 42,401
March 2024: 40,631
At the unveiling event on April 29, Rajesh Jejurikar, M&M’s Executive Director and CEO for auto and farm director, told CNBC-TV18, “3XO is a disruptive product, excelling in every dimension with many segment-first features and aggressive pricing.” He highlighted that M&M had previously launched three SUVs, establishing itself as a leading SUV player in terms of revenue market share. Despite earlier struggles in the compact SUV segment, the company aims to become the top player in this segment within the next two to three years.
The company announced that bookings for XUV 3XO will start online and at Mahindra dealerships on May 15, with deliveries beginning on May 26. M&M shares rose 4.85% to ₹2,162 on the NSE at 1:27 am.
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