M&M gains 3% to touch new high; overtakes Tata Motors’ market cap

Mahindra & Mahindra (M&M) has become the second most valuable car company in terms of market capitalization (market cap), surpassing Tata Motors.

At 10:47 a.m. in Thursday trading, the market cap of M&M stood at Rs 1.65 trillion compared to a combined market cap of Rs 1.59 trillion for Tata Motors and Tata Motors DVR, as the BSE data showed. M&M has overtaken Tata Motors in the market capitalization ranking after March 2021. Meanwhile, Maruti Suzuki India is in the top spot with a market capitalization of Rs 2.67 trillion.

Shares of M&M hit a new high of Rs 1,330.70, after rising 3 percent on the BSE on Thursday. The stock surpassed its previous high of Rs 1,330.30 reached on 2nd September 2022.

In the past three months, the M&M’s market price has appreciated 27 percent, while shares of Tata Motors posted a 2 percent gain. By comparison, the S&P BSE Sensex rallied 8 percent over the same period.

M&M is active in the automotive, farm equipment, and truck and bus segments. Tata Motors produces passenger cars, trucks, vans, coaches, buses, luxury cars, sports cars, construction equipment.

In August 2022, commercial vehicles (CV) maintained solid growth momentum driven by strong demand in the passenger and cargo segments. In addition, passenger vehicle (PV) volumes experienced double-digit growth due to a large order book and increased production.

Initial feedback from OEMs and dealers indicates that volume growth from the festive season (Onam and Ganesh festivals) has been positive for the PV segment, analysts at Emkay Global Financial Services said in an auto sector update.

The brokerage firm is bullish on FY23, expecting volume growth of 26 percent for PVs, 20 percent for CVs, 14 percent for 2Ws and 3 percent for tractors.

Meanwhile, thanks to aggressive launch plans, strong order books and a gradual recovery in chip availability, analysts at Choice Equity Broking expect M&M’s automotive (UV) business to grow strongly for at least the next few years. 1 or 2 years.

“Supported by new launches, LCV volume is expected to be healthy and we expect M&M to maintain its market share going forward as well. However, in tractors, any additional shortages or shortfalls in the primary agricultural market will reduce demand. Due to the unpredictability of monsoon progress, we are skeptical about the recovery of tractor volume,” said the broker.

As far as Tata Motors is concerned, analysts at HDFC Securities see multiple headwinds for JLR given recession concerns in its key markets like the US and Europe and slowdown in China, in addition to ongoing supply constraints.

However, in India, management noted that the trucker confidence index is at a two-year high in both ILCV and MHCV. As a result, management expects MHCV to post double-digit growth in FY23.

Tata Motors CV segment aims to gain market share and restore double-digit margin very soon. Its PV market share has further improved to 14.3% in the first quarter from 12.1% in FY22, and the company aims to continue outpacing industry growth, the brokerage said in its update. June quarter results.

technical view

Bias: Positive; likely consolidation

Support: Rs 1,280, Rs 1,220

Target: Rs 1,400

The stock has been trading on a positive bias since late March 2022 and has soared as much as 74 percent over the period. After a rapid rise through early August, the stock has seen a gradual upward move since then.

Looking at moving average price action, the overall bias remains positive as the stock trades firmly above its key moving averages. However, the selected momentum oscillators are showing some signs of tiredness, so the stock may consolidate in the short term.

Short-term support for the stock exists at Rs1,280, below which the stock can drop to the Rs1,220 level. On the upside, the stock needs to hold above Rs1,330 for a rally towards the Rs1,400 level.

(Contributions by Rex Cano)

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