M&M shares slip after strong Q3 earnings as brokerages stay divided on upside
Shares of Mahindra & Mahindra (M&M) declined more than 2 percent on February 12, even as the automaker reported a strong set of earnings for the October–December quarter of FY26, highlighting a familiar market dynamic where expectations, not just performance, drive price action.
The stock closed at ₹3,590 apiece, extending losses for a second consecutive session after the results were announced. The decline came despite double-digit growth in both profit and revenue, suggesting that parts of the market may have already priced in the operational strength or were reacting to forward-looking risks rather than past numbers.
According to exchange disclosures, M&M posted a consolidated net profit of ₹4,675 crore for Q3 FY26, up 47 percent year-on-year from ₹3,180.58 crore in the same quarter last year. Consolidated revenue from operations rose 24 percent YoY to ₹51,580 crore.
On a standalone basis, net profit increased 33 percent YoY to ₹3,931 crore, while revenue from operations climbed 26 percent to ₹38,517 crore.
Why it matters for auto stocks and market expectations
M&M is among India’s most closely tracked auto names, with a strong presence in SUVs, tractors, financial services and emerging electric vehicle segments. Its results are often seen as a proxy for rural demand, premiumisation trends and discretionary consumption.
The muted stock reaction despite strong growth indicates that investors may be shifting focus from backward-looking earnings to sustainability of margins, supply-chain stability and regulatory factors such as fuel-efficiency norms.
For the broader market, the episode reflects a phase where valuation discipline is returning. Stocks that have rerated sharply in the past year are facing tighter scrutiny, even when they deliver healthy numbers.
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What we know so far from M&M’s Q3 performance
The December-quarter performance showed broad-based strength across key businesses.
Key reported numbers include:
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Consolidated PAT: ₹4,675 crore, up 47% YoY
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Consolidated revenue: ₹51,580 crore, up 24% YoY
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Standalone PAT: ₹3,931 crore, up 33% YoY
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Standalone revenue: ₹38,517 crore, up 26% YoY
Group CEO and Managing Director Anish Shah attributed the performance to disciplined execution and sustained demand.
“We are delighted to report solid operating performance across the group in Q3’F26, reflecting our strong focus on growth coupled with disciplined execution,” Shah said.
He added that the Auto & Farm segment retained leadership on the back of steady customer demand and strong product acceptance. He also highlighted progress at Tech Mahindra, improved asset quality and profit growth at Mahindra Finance, and strong showings from Mahindra Logistics and Mahindra Lifespaces.
These comments signal that management sees momentum across multiple verticals, not just the core auto business.
What remains unclear despite the headline growth
While the topline and bottomline growth is clear, some forward-looking variables remain less certain:
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The durability of SUV demand amid rising competition
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Margin trajectory if input costs or discounting rise
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Supply-chain visibility beyond the near term
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Impact of regulatory norms such as CAFÉ standards
One brokerage specifically flagged supply and regulatory issues as monitorables, indicating that not all risks are behind the sector.
Details on segment-wise margin movements and order book depth were not part of the information provided here, and fuller clarity typically emerges through investor presentations and calls.
How brokerages are reading the results and valuations
Brokerage views following the results were constructive but not uniform, reflecting a balance between growth optimism and valuation caution.
Motilal Oswal: Buy, Target ₹4,378
Motilal Oswal maintained a ‘Buy’ rating, calling the Q3 profit largely in line with expectations.
The brokerage estimates M&M to deliver a CAGR of about:
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18% in revenue
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18% in EBITDA
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20% in PAT
over FY25–28.
It noted that M&M has already outperformed its own targets on earnings growth and return on equity, while reiterating management’s guidance of 15–20 percent EPS growth and 18 percent RoE.
JM Financial: Add, Target cut to ₹4,000
JM Financial retained an ‘Add’ rating but trimmed its target price to ₹4,000.
It flagged two key monitorables:
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Prolonged memory-chip shortages
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Achieving CAFÉ norms targets
This suggests that while the brokerage sees value, it is factoring in execution and regulatory risks.
Citi: Buy, Target ₹4,230
Citi maintained a ‘Buy’ call, expecting M&M to gain further market share in India’s passenger vehicle segment.
It cited:
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Strong product pipeline
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Expanding electric SUV portfolio
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Market share gains in cars
This aligns with the premium SUV narrative that has supported M&M’s re-rating.
Nomura: Buy, Target raised to ₹4,662
Nomura remained among the most bullish, raising its target price and keeping M&M as its top auto pick.
The brokerage pointed to:
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Premiumisation trends
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Strong model cycle
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Growth outperformance versus industry
Nomura’s stance implies confidence that M&M can continue to outgrow peers.
Market or sector impact as auto stays in focus
The reaction in M&M also feeds into the broader auto sector narrative. Automakers have been market leaders in recent quarters, supported by demand for SUVs, tractors and premium vehicles.
However, as valuations expand, earnings delivery alone may not be enough to drive further rerating. Investors are increasingly looking at:
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Market share sustainability
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EV transition strategies
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Capital allocation discipline
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Margin resilience
If leaders like M&M see profit-taking after good results, it may signal a maturing phase for the sector rally rather than a reversal.
Broader context as premiumisation reshapes auto demand
India’s auto market has been witnessing a shift toward higher-value vehicles, especially SUVs. This premiumisation trend has supported revenue growth even when volumes grow at a moderate pace.
M&M has been a key beneficiary, with a strong SUV lineup and brand positioning. At the same time, electrification and tighter emission norms are reshaping long-term strategies for all automakers.
Companies that can balance ICE profitability with EV investments are likely to remain in focus among institutional investors.
What analysts and management commentary suggest about direction
Management commentary emphasized operational discipline and cross-segment performance, while analysts highlighted both opportunity and risks.
The divergence in target prices — ranging roughly from ₹4,000 to ₹4,662 — shows that while sentiment is broadly positive, conviction levels differ on valuation comfort and risk factors.
Importantly, no brokerage in the provided data issued a ‘Sell,’ which suggests that the correction in the stock is not being widely read as a fundamental deterioration.
What it means for investors tracking M&M
For investors, the key takeaway is that strong earnings do not automatically translate into short-term stock gains if expectations are already elevated.
Portfolio considerations may include:
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Entry valuation versus long-term growth
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Exposure to auto cyclicality
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Balance between ICE and EV themes
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Monitoring regulatory and supply-chain risks
Long-term investors often focus on earnings trajectory and capital efficiency, while shorter-term traders may react more to sentiment and positioning.
What to watch next for M&M and the auto sector
Key triggers ahead include:
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Volume trends in SUVs and tractors
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EV rollout and acceptance
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Commodity cost movements
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Regulatory developments on fuel efficiency
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Management guidance in upcoming quarters
Investors will also watch whether M&M can sustain double-digit earnings growth while defending margins.
For now, the Q3 results reinforce operational strength, but the stock reaction shows that markets are looking beyond past performance to future certainty.
