Shares of automobile major Mahindra and Mahindra (M&M) were buzzing in trade on Wednesday, November 27, 2024, with the scrip rising up to 2.74 percent to an intraday high of Rs 3,070 per share. M&M is also one among the top gainers on BSE.
However, at 10:10 a.m., M&M shares were off their highs and trading 0.98 percent higher at Rs 3,017 per share. In comparison, the BSE Sensex was trading flat with a positive tilt at 80,009.82 points. The M&M share price rose after the firm revealed that its subsidiary, Mahindra Electric Automobile Limited (MEAL), had unveiled two new electric Sports Utility Vehicles (SUVs): the XEV 9e and the BE 6e.
In conjunction with MEAL, the business announced intentions to manufacture 90,000 vehicles per year at its Automotive Division in Chakan. The capacity will be built in stages and is expected to be operational by March 2025, it said.
M&M further stated that Rs 4,500 crore of its entire Rs 16,000 crore investment for the FY22-FY27 cycle is set aside for this project. The allocation comprises powertrain development, two product concepts that incorporate advanced software and technology, and increased manufacturing capacity.
What do the analysts say?
Analysts at Motilal Oswal praised the new models' novel features and affordable pricing, describing them as a compelling value proposition. However, they cautioned that a lack of adequate charging infrastructure may hinder the quick adoption of these vehicles. "While the pricing is attractive, the segment's incremental volume growth in the near term remains uncertain," they told me.
Motilal Oswal forecasts a compound annual growth rate (CAGR) of roughly 13% in revenue, 16% in profits before interest, tax, depreciation, and amortization (Ebitda), and 15.5% in profit after tax (PAT) for M&M between FY24 and FY27. The company has already exceeded its target of an 18% return on equity (RoE) in FY24 and intends to keep this level. Analysts maintain a 'Buy' rating on M&M, with a target price of Rs 3,420 based on a sum-of-the-parts (SOTP) valuation for September 2026.
According to Nuvama, the BE.6e and XEV.9E models are based on a new specialized EV platform that outperforms its competitors in terms of functionality while remaining competitively priced.
As a result, they have projected 48,000 battery electric vehicle (BEV) units in FY26. Analysts at Nuvama forecast a 15 percent CAGR in sales and 18 percent in core earnings for FY24-FY27, resulting in a sustained return on invested capital (RoIC) of more than 45%. Analysts have maintained a 'Buy' rating with a target price of Rs 3,700.
Regarding XEV 9e and BE 6e
The XUV 9e and BE 6e were unveiled at the Mahindra Research Valley in Chengalpattu. These vehicles are based on the unique INGLO platform, which marks the company's entry into "born-electric" architecture. With a 79 kWh lithium iron phosphate battery, both SUVs have a real-world range of more than 500 kilometers on a single charge. The battery enables fast DC charging at up to 175 kW, allowing for a 20% to 80% charge in just 20 minutes.
The XUV 9e is roughly 4,789 mm long, while the BE 6e is significantly shorter (4,371 mm).
"The BE 6e, with its edgy, athletic silhouette and race-inspired agility, is designed for those who thrive on performance and adrenaline, while the XEV 9e exudes sophistication with its suave SUV coupe design, seamlessly blending indulgent luxury with dynamic performance," highlighted Veejay Nakra, President of Mahindra & Mahindra Ltd. and Joint Managing Director of Mahindra Electric Automobile Limited.
