Shares of Mahindra & Mahindra Ltd (M&M) rose nearly 7% on the National Stock Exchange in morning trade on Monday, hitting a new 52-week high. 1245 per. This follows the company’s announcement on Saturday that the all-new Scorpio-N registered over 1,00,000 bookings within 30 minutes of the opening of bookings, which roughly translates to the ex-showroom price. 18,000 crores. The deliveries are likely to start by the end of September.
Analysts at Prabhudas Lilladher said in a report on July 31, “To compare with the recently launched models in the Sport Utility Vehicle (SUV) segment, the bookings for the Scorpio-N outperformed those of M&M’s XUV700 and Maruti Suzuki India’s”. The initial bookings for Brezza have been exceeded.” ,
Such strong demand will boost M&M’s volumes and accordingly, analysts at Prabhudas Lilladher forecast M&M’s domestic passenger vehicle volume to be around 3%/2% and earnings per share at 1% for FY23/24. has increased.
M&M aims to deliver over 20,000 units of this vehicle by December. It remains to be seen as to why the supply chain bottlenecks are not over, although the situation is improving.
Investors are happy with Mahindra & Mahindra’s transformation in the automotive segment on the back of new launches and improved margins. After all, the shares have gained 48% in the calendar year 2022, while the Nifty Auto index has gained 17.8% so far.
Further, with the softening of prices of commodities like steel and aluminium, margins can be expected to increase. But this may be fully implemented after the December quarter (Q3FY22) as the gains come with a lag.
Thus, the automaker’s margin performance in Q1FY23 will be the key monitorable. Also, management’s commentary on the chip shortage and its electric vehicle plans will need to be closely monitored. M&M is likely to announce its Q1 results on August 5.
“While we are positively surprised by the exceptional bookings that the Scorpio-N has received, we believe that there could be duplication of these bookings, further cancellations (currently 10-15% cancellation rate), And cannibalize M&M’s other offerings like the Scorpio Classic and Cannibals. XUV700,” added Prabhudas Lilladher’s report.
Meanwhile, the Nifty Auto index was the top gainer among the sectoral indices on Monday with gains of around 2.7%. The automaker is set to announce its July sales figures earlier this week. Strong YoY growth expected at 43-69% for Ashok Leyland/Tata Motors/Eicher Motors, 13% growth for M&M, 3-4% growth for Hero MotoCorp/Maruti Suzuki India/TVS Motor Company Will be ., but a drop of 10% for Bajaj Auto,” analysts at Jefferies India said in a report on July 28.
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