Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive manufacturing corporation headquartered in Mumbai. It was established in 1945 and is part of the Mahindra Group, M&M is one of the largest vehicle manufacturers by production in India. Recently its share price breaks its 52-week high, trading at around Rs. 1,030. The stock has been deepened from Rs. 970 in September 2018 and almost 3.5 years have been taken by the company to break its 52-week high levels. So, let’s discuss the reason which led to a rally in the stocks and reaching 52-week high levels.
Reasons behind the M&M Share Price Going Up?
- The product of the company is fully focused on SUV segments like Scorpio, bolero, XUV-700, etc. In passenger vehicles, the market share of utility vehicles is increasing by the time and in FY22 this market share has increased by more than 50%.
- Mahindra’s portfolio is focused on utility vehicles and the company is gaining market share slowly and gradually.
- SUV segment market share of Mahindra and Mahindra in FY22 stands at 19.2%, in FY21 it was at 17%.
- Even though many competitors like KIA, MG motors, etc. are entering the SUV segment, still Mahindra and Mahindra managed to gain the market share.
- The new product of the company which is the XUV-700 is witnessing strong booking, the company has received 1.7+ bookings for utility vehicles out of which 78,000+ is for the new XUV-700.
- The company has received a good response for the XUV-700, as when the company was launching the XUV-700 it received the 20000+ units order in 1 hour.
- The volume of the tractor is also reviving, due to high wheat prices, lack of unseasonal rains, and a normal monsoon forecast.
- The company has achieved a market share of 40% in its tractor segment even though the tractor industry volume is down by 8% in FY22.
- The company has also said that they will launch the new Scorpio that will give visibility in volumes.
- The revenue of the company in Q4FY22 was up by 27.3% and 10% on a YoY and QoQ basis respectively.
- The capital expenditure allocated between farm equipment and the auto segment stands at Rs. 15,300 cr. for FY22-24, this CAPEX will be divided into farm equipment and tractor segment.
- There is one issue that may arrive due to the launch of the new Scorpio cannibalizations.
What Should Investors Do?
The above-discussed reasons are the prominent factors that led the stock to cross 52-week high levels for the first time. This rise in stock price can attract investors, but an investor should do the proper analysis of the stock before making any decision to buy or sell.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.