M&M joins trillion-rupee club as market cap soars to Rs1.01 trillion

India’s home-grown car and tractor maker Mahindra and Mahindra Ltd has joined the elite club of companies with a market capitalisation of Rs1 trillion, as its shares hit an all-time high of Rs819 on the BSE in morning trade today after gaining as much as 2.23 per cent.

Currently, the market cap stands at Rs1.01 trillion. At 9.35am, the shares were trading at Rs812.85 on the BSE, up 1.5 per cent from its previous close, while India’s benchmark Sensex index rose 0.01 per cent to 34,309.96 points.

Mahindra stood at 30th position in overall market-cap ranking, BSE data shows. It is just behind Tata Motors, which has a market cap of Rs1.08 trillion. Mahindra’s market cap is now higher than Eicher Motors Ltd and Bajaj Auto Ltd. India’s largest car maker Maruti Suzuki India Ltd remained nation’s most valuable automaker with market cap of Rs2.77 trillion.

Thus far in the month of April, M&M outperformed the market by surging 9 per cent compared to a 4 per cent rise in the S&P BSE Sensex. The company reported a 10-per cent increase in total sales at 62,077 units in March, 2018 against 56,202 units for the same month last year.

Commenting on the outlook, M&M president, automotive sector, Rajan Wadhera, said, “We are particularly buoyed by the growth of our truck business, which has outperformed the industry. With three of our critical new automotive launches lined up in 2018-19, we are confident of increasing our market share in the utility vehicle space.”

According to Mint, analysts expect M&M shares to have robust buying interest as sales of tractors are likely to continue growing at a healthy pace in the current fiscal year owing to higher government spending on rural economy and infrastructure ahead of 2019 Lok Sabha elections. A good monsoon is also likely to buttress tractor sales.

Moreover, India Meteorological Department (IMD) said on Monday that India will have a normal monsoon which is likely to boost crop prices (as determined by the minimum support price offered by the government) and rural income.

“In 2Ws/tractors, rural demand momentum remains strong. News flow on good monsoons and double-digit minimum-support prices’ (MSP) hike in summer crops can be additional catalyst to watch out for,” said Nomura Research in a 12 April note.

The company holds 42.9 per cent market share in the domestic tractor market and accounts for 30 per cent of revenue and 50 per cent of profit.

Of the 42 brokers tracking the Mahindra stock on Bloomberg, as many as 40 recommended a “buy” while two have a “hold” rating.

M&M is one of the most diversified auto companies in India. Its businesses include manufacture of auto (passenger vehicles, commercial vehicles, three-wheelers, and two-wheelers etc) and farm equipment (tractors and other farm equipment).