Mahindra & Mahindra Ltd. delivered robust operational performance in the third quarter, reporting significant growth in both production and sales as the benefits of GST 2.0 reforms continued to drive demand beyond the festive season.

Strong Operational Performance

The company's provisional business updates disclosed to stock exchanges on Friday revealed impressive year-on-year growth across key metrics:

The strong domestic performance was offset by a decline in export volumes, which fell 9% to 2,849 units during the October-December quarter.

GST 2.0 Impact Drives Sustained Demand

The government's implementation of revised GST rates in September under the GST 2.0 reforms significantly reduced tax burden on cars, creating sustained demand momentum. Mahindra had announced it would pass on the full GST benefits to customers across its entire ICE SUV portfolio.

The revised GST structure brought notable changes across several Mahindra models:

Premium Models Benefit from Rate Rationalization

Other premium models previously subject to 48% GST plus cess also transitioned to a lower consolidated rate of 40% under the updated GST framework. These models include:

• Scorpio Classic
• Scorpio-N
• Thar Roxx
• XUV700

The uniform rate structure has simplified the tax framework while providing meaningful cost benefits to customers across Mahindra's SUV lineup.

Industry Outlook and Market Performance

Brokerage firm Motilal Oswal expects aggregate auto demand across its coverage universe to grow 17% year-on-year in the third quarter, with healthy performance across all segments. The Federation of Automobile Dealers Associations noted that India's auto retail industry enters 2025 on firm footing, backed by rural demand, affordability gains from GST 2.0, and steady consumer sentiment.

Shares of Mahindra & Mahindra settled 1.30% lower at ₹3,677.00 on the BSE ahead of the announcement, compared to a 0.70% decline in the benchmark Sensex. Despite the day's decline, the stock has gained 18% on a 12-month basis. The company is scheduled to announce its third quarter earnings on February 11.

Mahindra & Mahindra has received a strong endorsement from Motilal Oswal, with the brokerage firm maintaining its BUY rating and setting an ambitious target price of ₹4,521. The recommendation comes after comprehensive test drives of the company's latest offerings and analysis of its robust product pipeline.

New Model Launches Drive Growth Expectations

Motilal Oswal's research team conducted test drives of both the XUV7XO and XEV9S models, highlighting significant feature enhancements that position these vehicles competitively in the market. The XUV7XO stands out with multiple premium upgrades that set new benchmarks in its segment.

The brokerage expects the XUV7XO to contribute approximately 2,000-3,000 incremental units to the monthly run-rate of the XUV700 model, indicating strong market potential for this upgraded variant.

XEV9S Features and Market Positioning

The XEV9S model maintains similar interior features to its internal combustion engine (ICE) variant while incorporating advanced technological enhancements. Key differentiators include semi-active suspension technology and an augmented reality heads-up display, positioning it as a premium offering in the electric vehicle segment.

Future Product Pipeline and Growth Projections

Mahindra & Mahindra's strategic product roadmap extends through FY27, with plans for additional model launches that support long-term growth sustainability. The company's pipeline includes two more ICE variants scheduled for FY27, alongside one electric vehicle in the same fiscal year.

Investment Outlook and Valuation

Motilal Oswal's financial projections reflect strong confidence in Mahindra & Mahindra's operational performance across key metrics. The brokerage estimates the company will achieve a compound annual growth rate of approximately 19% in revenue, 18% in EBITDA, and 21% in profit after tax (PAT) over the FY25-28E period.

The target price of ₹4,521 is based on December 2027 estimated sum-of-the-parts (SoTP) valuation methodology. This healthy launch pipeline is expected to help sustain strong demand momentum going forward, supporting the brokerage's optimistic outlook for the automotive manufacturer's growth trajectory.