The selling pressure on the counter came after it released its Q4FY26 numbers on Monday, after market hours.
SML Mahindra Q4 results recap:
Nomura noted that SML Mahindra’s strong FY26 performance is a positive read for Mahindra & Mahindra’s (M&M’s) acquisition value, with the company’s stake now valued at ₹32 per share — up from ₹5 per share at the time of acquisition. However, the brokerage flagged cost pressure in Q4 as a negative read-across for other auto original equipment (OEs). SML’s potential to gain market share and its electric vehicle (EV) strategy should create value over the medium term, Nomura said.
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M&M remains Nomura’s top pick among OEMs. The brokerage estimates SUV volumes at 652,000 units in FY26, growing 18 per cent Y-o-Y to 7,39,000 in FY27 and further to 8,14,000 in FY28 — driven by premiumisation and a strong model cycle. On tractors, it sees volume growth of 24 per cent in FY26, moderating to 5 per cent in each of FY27 and FY28.
Nomura pegs M&M’s Ebitda margins at 14.3 per cent, 14.9 per cent, and 15.1 per cent for FY26, FY27, and FY28, respectively, but flagged potential downside if commodity prices continue to rise. The brokerage maintains a ‘Buy’ with an unchanged target price of ₹4,662, based on 16x FY28 EV/Ebitda. It believes the current valuation of around 12.7x FY28 core EV/Ebitda remains attractive. Key catalysts include continued SUV demand, rising EV volumes and margins, potential government incentives for four-wheeler EVs, and a possible initial public offer (IPO) of M&M’s Last Mile Mobility (LMM) business. Disclaimer: Views and outlook shared belong to the respective brokerages and analysts and are not endorsed by Business Standard. Readers are advised to exercise discretion.