M&M gains 3% to touch new high; overtakes Tata Motors’ market cap

Mahindra & Mahindra (M&M) has become the second most valuable automobile company in terms of market capitalisation (market cap), surpassing Tata Motors.

At 10:47 am in Thursday’s trade, M&M’s market cap stood at Rs 1.65 trillion as compared to a combined Rs 1.59 trillion market cap of Tata Motors and Tata Motors DVR, BSE data showed. M&M has surpassed Tata Motors in market cap ranking after March 2021. While, Maruti Suzuki India ranks on top with a market cap of Rs 2.67 trillion.

Shares of M&M hit a new high of Rs 1,330.70, after rising 3 per cent on the BSE on Thursday. The stock surpassed its previous high of Rs 1,330.30 touched on September 2, 2022.

In the past three months, the market price of M&M has appreciated by 27 per cent, while Tata Motors’ share recorded a 2 per cent gain. In comparison, the S&P BSE Sensex rallied 8 per cent during the same period.

M&M is engaged in the automotive, farm equipment and truck and bus segments. Tata Motors produces passenger cars, trucks, vans, coaches, buses, luxury cars, sports cars, construction equipment.

In August 2022, commercial vehicles (CVs) maintained robust growth momentum driven by strong demand in both passenger and cargo segments. Also, passenger vehicle (PV) volumes witnessed a double-digit growth due to the large order book and increased production.

Initial feedback from OEMs and dealers indicates that festive-season (Onam and Ganesh festivals) volume growth has been positive for the PV segment, analysts at Emkay Global Financial Services said in an auto sector update.

The brokerage firm is upbeat about FY23 and expects a volume growth of 26 per cent for PVs, 20 per cent for CVs, 14 per cent for 2Ws and 3 per cent for tractors.

Meanwhile, on the back of aggressive launch plans, solid order books, and gradual recovery in chip availability, analysts at Choice Equity Broking expect M&M’s automotive (UV) business to firmly grow for at least next 1-2 years.

“With the support of new launches, LCV volume is expected to be healthy and we expect M&M to maintain market share in the future as well. However in tractors, any additional shortfall or deficit in the primary agrarian market will dampen the rural demand. On account of the unpredictability of the monsoon progress, we are skeptical about the tractor volume recovery’, the brokerage said.

As regards to Tata Motors, analysts at HDFC Securities see multiple headwinds ahead for JLR given the recessionary concerns in its key markets like the US and Europe and slowdown in China, apart from unabated supply constraints.

However, in India, management highlighted that the truckers’ sentiment index is at a two-year high in both ILCVs and MHCVs. As a result, management expects MHCVs to post double-digit growth in FY23.

Tata Motors CV segment targets to gain market share and restore double-digit margin very soon. Its PV market share has further improved to 14.3 per cent in Q1 from 12.1 per cent in FY22, and the company aims to continue to outperform industry growth, the brokerage had said in its June quarter result update.

Tech view

Bias: Positive; Consolidation likely

Support: Rs 1,280, Rs 1,220

Target: Rs 1,400

The stock has been trading with a positive bias since late March 2022, and has soared as much as 74 per cent during the period. After a fast climb till early August, the stock has witnessed a gradual up move thereafter.

As per the price-to-moving averages action, the overall bias remains positive as the stock trades firmly above its key moving averages. However, select momentum oscillators are showing some signs of tiredness, hence the stock may consolidate in the near term.

The near term support for the stock exists at Rs 1,280, below which the stock may dip to Rs 1,220-odd level. On the upside, the stock needs to sustain above Rs 1,330 for a rally towards Rs 1,400-level.

(Inputs from Rex Cano)