M&M - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.4

• 📈 Revenue Growth: Quarterly PAT improved from ₹3,564 Cr to ₹4,521 Cr (+17.7%)
• 💰 Profit Margins: Strong, ROE at 20.8% and ROCE at 27.0%
• ⚖️ Debt Ratio: Debt-to-equity at 0.02, negligible leverage
• 💵 Cash Flows: EPS of ₹108, supported by robust auto and farm equipment sales
• 📊 ROE/ROCE: Efficient capital use, well above industry averages
• 📉 Valuation: P/E 31.9 vs Industry PE 33.9, fairly valued
• 📚 Book Value: ₹535, P/B ~6.73
• 📈 PEG Ratio: 0.93, balanced growth at reasonable valuation
• 🏢 Business Model: Diversified conglomerate with strong presence in automotive, farm equipment, IT services, and financials
• 🛡️ Competitive Advantage: Market leadership in SUVs and tractors, brand strength, diversified revenue streams

Positive

• ✅ Strong profit growth (+17.7% QoQ)
• ✅ High ROE (20.8%) and ROCE (27.0%)
• ✅ Low debt-to-equity ratio (0.02)
• ✅ Diversified business model reduces risk

Limitation

• ⚠️ P/B ratio at ~6.73 indicates premium valuation
• ⚠️ Dividend yield at 0.71%, modest shareholder returns
• ⚠️ FII holdings reduced by 0.49%
• ⚠️ RSI at 42.0, neutral momentum with MACD negative

Company Negative News

• 📉 Slight reduction in foreign institutional investor holdings
• 📉 Margin pressures from rising input costs

Company Positive News

• 🌍 Strong SUV sales and leadership in tractor segment
• 🚜 Expansion in farm equipment and rural markets
• 💡 Consistent quarterly profit growth

Industry

• 💹 Industry PE at 33.9, M&M trades slightly below
• 📈 Auto industry supported by rising demand and infrastructure push

Conclusion

M&M demonstrates strong fundamentals with robust profitability, low debt, and diversified operations. Valuation is fair relative to peers, though premium P/B suggests limited margin of safety. Entry zone is attractive around ₹3,300–3,500 (near DMA 200 support). Long-term holding is favorable given leadership in SUVs and tractors, diversified business model, and consistent earnings growth.

Would you like me to extend this into a peer benchmarking overlay comparing M&M with Tata Motors and Ashok Leyland, or should we run a sector rotation scan to identify compounding opportunities across auto and farm equipment plays?