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Mahindra Scorpio-N launch pushes M&M shares to hit 52-week high

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M&M share price: Shares of Mahindra and Mahindra rose around 4 percent, in a weak market, after the carmaker said it has launched All-New Scorpio-N. Post this announcement, multiple brokerage firms are bullish on the company’s business outlook for the SUV segment.

Shares of Mahindra and Mahindra rose around 4 percent in a weak market a day after the carmaker launched "the bid daddy of SUVs", the All-New Scorpio-N.

At 10:11 am, the stock was trading 3.2 percent higher at Rs 1,116 on the BSE. It has been gaining for the last four days and has risen 14 percent during the period. The stock hit a 52-week high today at Rs 1,121.
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The All-New Scorpio-N, which has the lowest CO2 emission in the SUV segment, is available in five variants and seven colours. The ex-showroom price for All-New Scorpio-N starts at Rs 11.99 lakh.
“It is a global product, being unveiled simultaneously in South Africa and Nepal, alongside the India launch, and will be followed by launches in other international markets,” said Veejay Nakra, President, Automotive Division, M&M.
Post this announcement, multiple brokerage firms are bullish on the company’s business outlook for the SUV segment.
Brokerage firmRatingTarget price
NomuraBuy₹1,308
Morgan StanleyOverweight₹1,198
CLSABuy₹1,356
Nomura said the All-New Scorpio-N is another potential winner and it could incrementally add a 10-15 percent upside to overall volumes in the utility vehicle space during FY23-24.
M&M's utility vehicle market share has been improving and has risen to 17 percent in May 2022 from 13-14 percent in FY21-22.
CLSA highlighted that the All-New Scorpio-N will boost M&M’s SUV line-up.
The carmaker is offering advanced features at a lower price, which seems to be a great proposition for customers, pointed out CLSA. It sees room for further improvement in volume if chip supply eases faster, it added.
Meanwhile, Morgan Stanley believes that passenger vehicles will continue to lead the recovery in the automobile sector.
This launch comes at a time when strong consumer demand coupled with the ongoing shortage of chips has reportedly resulted in the waiting period for another M&M flagship model, the XUV700 SUV, ballooning to as long as 22 months.
“The upward journey on Mahindra and Mahindra (M&M) started when there was change of guard at the top and the new CEO’s first important step was to focus on capital allocation and getting a higher return on investment, a lot of the subsidy issues were resolved and they always had a very good backlog of new models, which have now been launched and very well received,” said Dipan Mehta, Director, Elixir Equities.
Overall, he sees very good improvement in the volumes and some of the semiconductor-related issues, supply chain issues have now more or less been resolved and with lower steel prices, and there is some amount of flexibility on operating profit and margin management as well.
“So keeping all of that in mind, I think, as well as the valuation is concerned, M&M should do even better from these levels or so. This is one company which in next few quarters will surprise on the upside as far as earnings are concerned. And there's certainly scope for the P/E multiples also to be expanded given that it trades at a discount to Maruti and Tata Motors,” Mehta said.
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