Mahindra & Mahindra, an OG Indian automaker, is shining bright amid a dim outlook for the car market, both domestic and globally.
In fact, its stock’s rising even faster than Tesla’s. Just.
Demand for the Indian carmaker’s products is so fierce, you’d have to wait until 2026 to get your hands on one of its bestselling Thar Roxx SUVs. By contrast, Indian auto companies were stuck with 780K unsold cars worth a jaw-dropping $9.1 billion as of the end of August.
November is typically a month of big spending in India – it’s usually when Diwali falls and when most weddings take place.
And it’s been great month for Mahindra this year, especially compared to the fortunes of the rest of the industry:
- Passenger vehicle sales dropped 13.7% that month according to the Federation of Automobile Dealers Associations.
- But 53% of all cars sold were SUVs, as Indians are ditching small cars and going all in on SUVs, a sector Mahindra dominates.
- Meanwhile, Mahindra’s sales rose 16% year on year.
As for market leader Maruti Suzuki? Barely in double digits. Hyundai? Down 2.4%. Mahindra reported an even crazier 25% surge the previous month.
Tractor on
And it’s not just SUVs that are revving the growth engine at Mahindra. The company is also a market leader in tractors. You heard right.
An above-average monsoon this year has translated to greater irrigation needs and higher demand for tractors, says Saji John from Geojit Financial.
There’s also strong demand for its new car launches, including EVs, John adds. Mahindra has launched two EVs this year— the XEV 9E and the BE 6 — in a bid to take on Tata Motors, which dominates this segment in India with a 65% share.
Taking stock
Mahindra stock has risen by 76% this year, beating not only every Indian carmaker, but even Tesla – if only by a smidge. Elon Musk’s baby saw its stock rise 75.5%.
And analysts love the stock. Out of 34 analysts covering it, 31 rate it as a “buy”, with an average prediction of 11% returns over the next 12 months. Not shabby, after a 460% surge in the last five years.
But the picture’s not all rosy.
Mahindra is pricier than its Indian peers, trading at 27 times forward earnings, with Hyundai and Maruti at least 20% cheaper.
At this price, it needs to knock it out of the park every time it reports numbers – or investors are going to sell.
The company’s debt-to-equity is also high at 1.66. Its closest competitor, Tata Motors, is at 1.05, while other market leaders have managed to keep the figure at less than 1.
Meanwhile, Mahindra has also struggled to gain traction internationally, says ICICI Direct analyst Shashank Kanodia. And further challenges could arise should India’s central bank pause rate cuts further.
