The stock, currently trading at ₹3,581.55 with a market capitalisation of ₹4,45,376 crores, has gained 0.93% in the latest trading session, reflecting investor confidence in the company's operational momentum. With a year-to-date return of 19.03%, significantly outperforming the Sensex's 6.81% gain, M&M continues to demonstrate its leadership position in India's evolving automotive landscape.
The quarter's performance was characterised by robust top-line expansion, with net sales reaching ₹45,529.19 crores, representing a sequential growth of 6.88% over Q1 FY2026 and a strong 22.33% year-on-year increase. This marked the company's highest-ever quarterly revenue, underscoring the sustained demand for its product portfolio across utility vehicles, tractors, and commercial vehicles.
| Metric | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 |
|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 45,529 | 42,599 | 41,470 | 37,924 | 37,218 |
| QoQ Growth | +6.88% | +2.72% | +9.35% | +1.90% | +4.98% |
| YoY Growth | +22.33% | +20.16% | +17.48% | — | — |
| Net Profit (₹ Cr) | 4,083 | 3,295 | 3,181 | 3,171 | 3,283 |
| QoQ Growth | +23.92% | +3.60% | +0.31% | -3.41% | +19.19% |
| YoY Growth | +24.39% | +19.65% | +19.64% | — | — |
| Operating Margin | 18.11% | 18.58% | 19.85% | 18.93% | 19.57% |
| PAT Margin | 9.63% | 8.32% | 8.74% | 8.92% | 9.58% |
Financial Performance: Volume-Led Growth Drives Profitability
Mahindra & Mahindra's Q2 FY2026 results showcased impressive volume-driven revenue expansion, with net sales of ₹45,529.19 crores marking a sequential increase of 6.88% from Q1 FY2026's ₹42,599.31 crores. The year-on-year comparison was even more compelling, with revenue growth of 22.33% significantly outpacing industry benchmarks and reflecting strong market share gains across key segments.
Operating profit excluding other income stood at ₹8,227.80 crores in Q2 FY2026, translating to an operating margin of 18.11%. Whilst this represented a sequential contraction of 47 basis points from Q1 FY2026's 18.58% and a year-on-year decline of 146 basis points from 19.57%, the margin compression was primarily attributable to higher raw material costs and increased employee expenses, which rose to ₹3,044.52 crores from ₹2,678.58 crores a year ago.
The profit before tax for Q2 FY2026 reached ₹5,644.11 crores, up 22.14% year-on-year from ₹4,620.87 crores, whilst the consolidated net profit of ₹4,083.32 crores reflected strong operational leverage and effective cost management. The PAT margin improved to 9.63% from 9.58% in the corresponding quarter last year, demonstrating the company's ability to maintain profitability despite margin pressures at the operating level.
On a half-yearly basis, H1 FY2026 net sales aggregated to ₹88,128.50 crores, whilst consolidated net profit reached ₹7,378.49 crores, reflecting sustained momentum across both quarters. Interest costs rose to ₹2,431.19 crores in Q2 FY2026 from ₹2,107.69 crores a year ago, reflecting higher working capital requirements to support volume growth and increased borrowings to fund capacity expansion initiatives.
Operational Excellence: Strong Return Ratios Despite Leverage
Mahindra & Mahindra's operational efficiency metrics paint a picture of a company successfully navigating the challenges of a capital-intensive business model. The company's return on equity (ROE) stood at 16.78% as of the latest reporting period, a notable improvement from the average ROE of 13.82% over recent years. This higher ROE demonstrates the company's enhanced ability to generate returns on shareholder capital, reflecting both improved profitability and efficient capital deployment strategies.
The return on capital employed (ROCE) reached 15.33% in the latest period, up from an average of 11.97%, indicating strengthening operational efficiency and better utilisation of the capital base. This improvement in ROCE is particularly significant given the company's substantial capital expenditure programme to expand manufacturing capacity and develop new products, suggesting that these investments are beginning to generate meaningful returns.
However, the company's balance sheet continues to reflect the capital intensity of the automotive and tractor manufacturing business. Long-term debt stood at ₹83,782.46 crores as of March 2025, up from ₹69,741.42 crores in the previous year, resulting in a debt-to-equity ratio of 1.07. The debt-to-EBITDA ratio of 4.98 times, whilst elevated, has remained manageable given the company's strong cash generation capabilities.
Key Operational Strengths
ROE Expansion: The company's ROE improvement to 16.78% from an average of 13.82% demonstrates enhanced capital efficiency and profitability. This higher return on equity reflects both margin expansion and improved asset turnover, positioning M&M favourably relative to many automotive peers.
Cash Flow Generation: Operating cash flow for FY2025 turned positive at ₹3,175.81 crores, marking the highest annual operating cash generation, after two consecutive years of negative operating cash flows. This improvement signals better working capital management and sustainable business operations.
The company's shareholder funds grew to ₹77,038.86 crores as of March 2025 from ₹66,190.55 crores in the previous year, reflecting retained earnings and strong profit generation. Current assets of ₹1,26,573.27 crores comfortably exceeded current liabilities of ₹90,322.01 crores, providing a healthy liquidity cushion to support ongoing operations and growth initiatives.
Margin Dynamics: Balancing Growth and Profitability
The margin trajectory for Mahindra & Mahindra in Q2 FY2026 revealed the complex interplay between volume growth, pricing power, and cost management. The operating margin of 18.11%, whilst down from the previous quarter's 18.58% and the year-ago quarter's 19.57%, remained within the company's historical range and reflected conscious strategic choices to prioritise volume growth and market share gains.
Employee costs rose 13.67% year-on-year to ₹3,044.52 crores in Q2 FY2026, driven by headcount additions to support expanded production capacity and annual salary increments. As a percentage of sales, employee costs stood at 6.69%, marginally higher than the 7.20% in the corresponding quarter last year, indicating some operating leverage despite the absolute increase.
The gross profit margin of 14.78% in Q2 FY2026 showed resilience compared to 14.98% in the year-ago quarter, declining just 20 basis points despite raw material cost pressures. This relatively stable gross margin reflected the company's pricing power in its core SUV and tractor segments, where strong brand equity and limited direct competition enabled price realisations to largely offset input cost inflation.
Margin Outlook: Balancing Act Ahead
Looking ahead, Mahindra & Mahindra's margin trajectory will depend on three key factors: commodity price trends, particularly steel and aluminium; the company's ability to maintain pricing discipline in an increasingly competitive market; and the pace of operating leverage from new capacity coming on stream. Management's focus on premiumisation and cost optimisation initiatives should provide some cushion, but investors should monitor quarterly margin trends closely for signs of sustained pressure or recovery.
Industry Leadership: How M&M Compares to Peers
Mahindra & Mahindra's positioning within India's automotive sector reveals a company that has carved out a distinctive niche, particularly in the utility vehicle and tractor segments. With a market capitalisation of ₹4,45,376 crores, M&M ranks as the second-largest automobile company by market value, trailing only Maruti Suzuki but commanding a significant premium to most other domestic manufacturers.
| Company | P/E (TTM) | P/BV | ROE % | Div Yield % | Debt/Equity |
|---|---|---|---|---|---|
| M & M | 32.11 | 5.72 | 13.82 | 0.71 | 1.07 |
| Maruti Suzuki | 33.28 | 0.49 | 10.64 | 0.86 | -0.05 |
| Bajaj Auto | 32.82 | 7.08 | 21.03 | — | -0.25 |
| Eicher Motors | 39.73 | 9.03 | 17.78 | 1.00 | -0.03 |
| TVS Motor | 63.94 | 2.06 | 19.22 | 0.28 | 1.33 |
The peer comparison reveals M&M's unique risk-reward profile. Trading at a P/E ratio of 32.11x, the stock commands a valuation broadly in line with Maruti Suzuki (33.28x) and Bajaj Auto (32.82x), but at a significant discount to TVS Motor (63.94x) and Eicher Motors (39.73x). This valuation positioning reflects the market's assessment of M&M's growth prospects, which are viewed as solid but not exceptional relative to some faster-growing two-wheeler manufacturers.
The company's ROE of 13.82% places it below Bajaj Auto (21.03%), Eicher Motors (17.78%), and TVS Motor (19.22%), but comfortably ahead of Maruti Suzuki (10.64%). This mid-tier ROE positioning reflects M&M's capital-intensive business model, particularly in the tractor segment, which requires substantial fixed asset investments. However, the improving trend in ROE—with the latest reading at 16.78%—suggests the company is making progress in enhancing capital efficiency.
M&M's price-to-book ratio of 5.72x sits in the middle of the peer group, higher than Maruti Suzuki (0.49x) and TVS Motor (2.06x) but below Bajaj Auto (7.08x) and Eicher Motors (9.03x). This valuation multiple reflects the market's recognition of M&M's strong brand equity and market leadership in SUVs and tractors, whilst also acknowledging the company's higher leverage compared to debt-free peers like Bajaj Auto and Eicher Motors.
The debt-to-equity ratio of 1.07 represents a key differentiator, with M&M carrying significantly more leverage than most peers. Only TVS Motor, with a debt-to-equity ratio of 1.33, has higher leverage amongst the major automotive companies. This higher debt load reflects M&M's aggressive capacity expansion and working capital requirements, but also represents a potential risk factor if operating conditions deteriorate or interest rates rise sharply.
Valuation Analysis: Premium Justified by Growth Trajectory
At the current price of ₹3,581.55, Mahindra & Mahindra trades at a P/E ratio of 32.11x trailing twelve-month earnings, representing a premium of approximately 40% to the broader automobile sector's average P/E of 23x. This valuation premium reflects the market's recognition of M&M's dominant position in the utility vehicle segment, strong tractor franchise, and improving profitability trajectory.
The company's price-to-book ratio of 5.72x appears elevated in absolute terms but is justified by the improving return on equity, which has expanded to 16.78% in the latest period from an average of 13.82%. When ROE exceeds the cost of equity, premium valuations to book value are warranted, and M&M's improving capital efficiency supports the current multiple.
The EV/EBITDA multiple of 16.61x suggests moderate valuation relative to growth prospects, particularly when considering the company's 5-year EBIT growth rate of 33.37%. The PEG ratio of 1.32 indicates that the stock is not egregiously expensive relative to its growth trajectory, though it does trade at a slight premium to the ideal PEG ratio of 1.0.
From a 52-week perspective, the stock currently trades just 3.80% below its high of ₹3,723.00 and 51.73% above its low of ₹2,360.45, suggesting limited downside risk at current levels whilst maintaining reasonable upside potential. The valuation grade of "Attractive" assigned by proprietary models reflects this balanced risk-reward equation, with the stock having oscillated between "Very Attractive" and "Attractive" over recent months as prices have moved within a range.
The dividend yield of 0.71%, whilst modest, is supported by a conservative payout ratio of 21.84%, leaving ample room for dividend growth as profitability continues to expand. The company's commitment to returning cash to shareholders through dividends, combined with strong retained earnings for growth investments, strikes an appropriate balance for a company in growth mode.
Shareholding: Institutional Confidence Building
The shareholding pattern for Mahindra & Mahindra reveals a company with minimal promoter holding but exceptionally strong institutional investor backing. Promoter holding stands at a negligible 0.02%, reflecting the company's status as a professionally managed entity within the broader Mahindra Group structure.
| Category | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 0.02% | 0.02% | 0.02% | — |
| FII | 38.04% | 38.54% | 38.30% | -0.50% |
| Mutual Funds | 16.35% | 15.39% | 15.37% | +0.96% |
| Insurance | 10.57% | 11.31% | 11.65% | -0.74% |
| Other DII | 3.12% | 2.96% | 2.83% | +0.16% |
| Non-Institutional | 13.49% | 13.35% | 13.39% | +0.14% |
Foreign institutional investors (FIIs) hold 38.04% of the company's equity as of September 2025, down marginally from 38.54% in the previous quarter. This slight reduction of 50 basis points could reflect profit booking after the stock's strong rally, but the overall FII holding remains substantial, indicating continued confidence in the company's long-term prospects amongst global investors.
Domestic mutual funds have been increasing their stake, with holdings rising to 16.35% in September 2025 from 15.39% in June 2025, representing a sequential increase of 96 basis points. This accumulation by domestic institutional investors signals growing conviction in M&M's investment thesis amongst professional fund managers who closely track the automotive sector. With 46 mutual fund schemes holding stakes, the stock enjoys broad-based domestic institutional support.
Insurance companies reduced their holding to 10.57% from 11.31% in the previous quarter, marking a decline of 74 basis points. This reduction, combined with the marginal FII selling, suggests some institutional profit taking at elevated valuations, though the overall institutional holding of 68.08% remains exceptionally high and provides strong support for the stock price.
The total institutional holding of 68.08%, comprising FIIs, mutual funds, insurance companies, and other DIIs, represents one of the highest institutional ownerships in the Indian automotive sector. This concentrated institutional base provides price stability and ensures that the stock is closely monitored by sophisticated investors, reducing the risk of irrational price movements driven by retail speculation.
Stock Performance: Consistent Outperformance Across Timeframes
Mahindra & Mahindra's stock price performance across multiple timeframes demonstrates the market's sustained confidence in the company's transformation story. Trading at ₹3,581.55 as of November 4, 2025, the stock has delivered compelling returns across virtually every measurement period, significantly outperforming both the broader Sensex and the automobile sector index.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +0.14% | -1.38% | +1.52% |
| 1 Month | +3.46% | +2.77% | +0.69% |
| 3 Months | +11.92% | +3.01% | +8.91% |
| 6 Months | +22.22% | +3.67% | +18.55% |
| YTD | +19.03% | +6.81% | +12.22% |
| 1 Year | +24.65% | +5.94% | +18.71% |
| 2 Years | +143.88% | +29.67% | +114.21% |
| 3 Years | +167.65% | +36.93% | +130.72% |
The one-year return of 24.65% significantly outpaced the Sensex's 5.94% gain, generating alpha of 18.71 percentage points. More impressively, the stock has delivered this outperformance whilst exhibiting a beta of just 0.56, indicating lower volatility than the broader market. This combination of strong returns with below-market volatility represents an attractive risk-adjusted return profile for investors.
Over longer timeframes, the outperformance becomes even more pronounced. The three-year return of 167.65% compares favourably to the Sensex's 36.93% gain, whilst the five-year return of 500.18% dwarfs the benchmark's 105.48% advance. This sustained outperformance reflects the fundamental transformation of Mahindra & Mahindra's business model, improved profitability, and market share gains in key segments.
The stock currently trades above all key moving averages, including the 5-day (₹3,529.12), 20-day (₹3,532.12), 50-day (₹3,504.12), 100-day (₹3,343.23), and 200-day (₹3,112.78) moving averages. This technical positioning indicates strong momentum and suggests the stock is in a sustained uptrend, though the proximity to recent highs suggests limited near-term upside without a fresh catalyst.
"With returns of 500% over five years and sustained alpha generation across all timeframes, Mahindra & Mahindra has emerged as one of India's most successful automotive turnaround stories."
The technical trend classification of "Mildly Bullish" as of November 4, 2025, down from "Bullish" previously, suggests some near-term consolidation may be warranted after the stock's strong rally. However, the overall technical picture remains constructive, with multiple indicators including MACD, Bollinger Bands, and KST showing positive signals on monthly timeframes.
Investment Thesis: Quality Growth at Reasonable Valuation
Mahindra & Mahindra's investment proposition rests on four key pillars: improving financial fundamentals, strong market positioning in high-growth segments, attractive valuation relative to growth prospects, and positive technical momentum. The company's proprietary Mojo Score of 71 out of 100, placing it in the "BUY" category, reflects this balanced assessment of the stock's merits across multiple dimensions.
The "Good" quality grade reflects the company's healthy long-term growth trajectory, with sales compounding at 14.41% annually over five years and operating profit growing at an impressive 33.37% CAGR. This growth has been achieved whilst maintaining reasonable financial leverage and improving return ratios, demonstrating management's ability to scale the business profitably.
The "Positive" financial trend classification is supported by multiple factors, including the highest-ever quarterly net sales of ₹46,105.67 crores in Q2 FY2026, the strongest annual operating cash flow of ₹3,175.81 crores in FY2025, and the highest quarterly operating profit to interest coverage ratio of 3.80 times. These metrics collectively indicate a business operating at peak efficiency with strong momentum.
The "Attractive" valuation grade acknowledges that whilst the stock trades at a premium to the sector average, this premium is justified by superior growth prospects and improving capital efficiency. With a ROCE of 15.33% and an enterprise value to capital employed ratio of 3.28x, the stock offers reasonable value for investors seeking exposure to India's automotive growth story.
Key Strengths & Risk Factors
KEY STRENGTHS ✓
- Market Leadership: Dominant position in utility vehicles and tractors with strong brand equity and pricing power
- Growth Trajectory: Consistent double-digit revenue growth with 22.33% YoY expansion in Q2 FY2026
- Improving Returns: ROE expansion to 16.78% and ROCE improvement to 15.33% demonstrate enhanced capital efficiency
- Cash Generation: Positive operating cash flow of ₹3,175.81 crores in FY2025 after two years of negative cash flows
- Institutional Support: Strong institutional holding of 68.08% provides price stability and sophisticated investor base
- Product Pipeline: Strong new product launches in SUV segment driving volume growth and market share gains
- Operational Leverage: Improving profitability with PAT margin expansion despite operating margin pressures
KEY CONCERNS ⚠
- Margin Pressure: Operating margin compression of 146 bps YoY to 18.11% raises concerns about pricing power sustainability
- High Leverage: Debt-to-equity ratio of 1.07 and debt-to-EBITDA of 4.98x higher than most automotive peers
- Interest Burden: Rising interest costs of ₹2,431.19 crores in Q2 FY2026 could pressure profitability if rates remain elevated
- Commodity Exposure: Vulnerability to raw material price volatility, particularly steel and aluminium
- Competitive Intensity: Increasing competition in SUV segment from new entrants and existing players
- Valuation Premium: P/E of 32.11x represents 40% premium to sector average, limiting margin of safety
- Tractor Cyclicality: Dependence on monsoon and rural income for tractor segment creates earnings volatility
Outlook: Key Monitoring Points
POSITIVE CATALYSTS
- Sustained volume growth above 15% YoY in core SUV and tractor segments
- Operating margin stabilisation or expansion above 18.5% levels
- Continued improvement in ROE and ROCE metrics above current levels
- Successful new product launches gaining market traction
- Reduction in debt-to-EBITDA ratio below 4.5x through cash generation
RED FLAGS
- Operating margin falling below 17.5% for two consecutive quarters
- Revenue growth decelerating below 10% YoY
- Significant FII selling pushing holding below 35%
- Debt-to-EBITDA ratio rising above 5.5x
- Market share losses in key SUV or tractor segments
The Verdict: Solid Growth Story at Fair Valuation
Score: 71/100
For Fresh Investors: Mahindra & Mahindra presents a compelling opportunity to participate in India's automotive growth story through a market leader with improving fundamentals. The combination of strong volume growth, expanding return ratios, and reasonable valuation relative to growth prospects makes the stock attractive for fresh accumulation. However, investors should adopt a staggered buying approach given the stock's proximity to 52-week highs and build positions on any near-term corrections.
For Existing Holders: Continue holding with a long-term perspective. The company's operational momentum, improving cash generation, and strong institutional backing support the investment thesis. Whilst near-term margin pressures warrant monitoring, the overall trajectory remains positive. Consider adding on dips below ₹3,400 levels to average down the cost base.
Fair Value Estimate: ₹3,750 (4.70% upside from current levels)
Note— ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results, and all investments carry risk of loss.
