Mahindra's next challenge: maintaining its growth lead

Mahindra & Mahindra’s March quarter (Q4FY26) shows why it’s one of the most consistent growth stories in India’s auto sector. It beat Street expectations on revenue and profit. Better-than-expected realizations in SUVs – its primary segment, and a sharp rise in other income were the key drivers. The stock has gained over 4% since the earnings announcement on Tuesday.

Standalone revenue rose 26% year-on-year to ₹39,550 crore, aided by continued industry-beating growth in SUVs with the segment now contributing nearly 80% of revenues. Successful launches, such as the XEV 9e and BE 6, added to the sustained demand for Scorpio, Thar Roxx, Bolero, and XUV 3XO, leading to over 660,000 SUVs sold during FY26.

M&M is India’s second-largest passenger vehicle manufacturer by volume and the market leader by value, with a 25.3% share of the industry’s revenue.

M&M’s auto Ebit margin excluding EVs stood at a healthy 10.9%, supported by price hikes undertaken amid commodity inflation. But the bigger surprise came from other income, which rose more than tenfold to ₹590 crore due to ₹500 crore of PLI accruals linked to EV models. Thus, net profit jumped 53% to ₹3,740 crore.

The EV business, historically a margin drag, is now showing early signs of operating leverage. “We rank number one in revenue market share in electric SUV and have a penetration of 9.6% in M&M portfolio, much higher than the industry average,” said Rajesh Jejurikar, ED and CEO (auto and farm sector). The EV business Ebit margin of 5.1% in Q4FY26 is a notable improvement for a segment still in investment mode. The management expects EV penetration to rise to 13-21% over the next five years.

For farm equipment, the signals are mixed. Domestic market share improved to 44% for the full year, but a slowdown to mid-single-digit growth is expected on the high base of FY26 amid the prediction of weak monsoons in FY27.

While international farm operations continue to face headwinds across the US, Brazil, and Turkey, M&M has accelerated rationalization efforts through exits in Finland, Japan, and Turkey, potentially clearing the path for better profitability over the medium term.

Still, capacity expansion plans, a deep SUV pipeline, and improving EV economics continue to support management’s confidence in delivering a 15-20% earnings-per-share CAGR over the next five years, despite ongoing macro uncertainty. But at 22x FY27 consensus earnings, the stock is no longer cheap.

Ananya Roy is the Founder of Credibull Capital, a SEBI-registered investment adviser, where she focuses on building disciplined, research-driven investment strategies for long-term wealth creation. A CFA charterholder with an MBA in Finance from a premier IIM and an engineering degree from NIT, she combines strong academic grounding with nearly 15 years of hands-on experience across the investment management spectrum.<br><br>Her career spans index construction, portfolio management, and private equity investing, giving her a 360-degree perspective on capital markets. Prior to founding Credibull Capital, she held key roles at Edelweiss, Reliance PMS, and Morningstar, where she was involved in fund management, equity research, and product development. This diverse exposure enables her to seamlessly connect macroeconomic trends with bottom-up stock selection.<br><br>Ananya is known for her ability to simplify complex financial concepts and translate them into actionable insights for investors. She writes extensively on the economy, market trends, regulatory developments, and personal finance, with her work also featured in leading publications such as Moneycontrol, The Economic Times, and Financial Express.<br><br>Deeply passionate about investing, she enjoys immersing herself in detailed industry analysis and company fundamentals, constantly seeking to uncover high-conviction opportunities. Her investment philosophy is rooted in patience, discipline, and a sharp focus on risk-adjusted returns.

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