Mahindra & Mahindra shares rise over 5%: Key factors behind the rally

Shares of the auto maker closed at ₹2,721.35 apiece on NSE, soaring 4.13%. It was among top five most contributing stocks on the 50-share index. During the morning trade, M&M shares were trading at ₹2,732.70 apiece on NSE, soaring 4.57%.

UBS, in its report, said amid concerns of industry slowdown, they expect M&M volumes to grow 9% in FY26, led by strong demand for SUVs and the launch of EVs. “We expect more product intervention in SUVs from M&M in FY26,” the research firm said in a note.

It upgraded the stock to ‘buy’ from ‘neutral’ as the risk/reward had turned favourable.

UBS also said that farm equipment (FES), which accounts for 40%/30% of EBIT/SoTP, is seeing robust demand with no imminent threat of technology or regulatory disruptions.

M&M shares have tumbled almost 14.29% since February 5, 2025, which is one month. "The share price correction over the last month on the back of EV-related news flow is an overreaction, in our view, as domestic SUVs account for c. 50% of EBIT,” UBS said.

Year-to-date, M&M shares have fallen 11.59%. However, in one year, since March 5, 2024, the stock had gained 40.57%.

UBS sees limited impact from Tesla’s potential entry into India, as the Model 3 (the highest-selling model in the US) is likely not well-suited to the Indian market due to its low ground clearance and sedan form factor.

“The Model Y, which is relevant for the Indian market, is expected to have a landing price of ₹5-6 million with 15% customs duty. Compared to this, Mahindra’s XEV 9e top-end variant’s landed price is ₹3.3 million,” it explained in its report.

UBS’s Tesla analyst Joseph Spak believes Tesla’s India foray could be limited to imports in the near term.

The automaker's total sales increased 15% year-on-year to 83,702 units in February. It had sold 72,923 units in February last year.

In the utility vehicles segment, the company said it sold 50,420 vehicles in the domestic market, a growth of 19% as compared with 42,401 units in February last year.

Exports increased to 3,061 units last month, an increase of 99% over 1,539 units in February 2024. “This strong performance is a result of a continued positive momentum for our SUV portfolio,” Mahindra & Mahindra (M&M) Automotive Division President Veejay Nakra had said.

The company said its total tractor sales last month stood at 25,527 units, as against 21,672 units for the same period last year. Its exports for February stood at 1,647 units.