Automobile major, Mahindra & Mahindra delivered strong Q3 earnings, driven by a robust demand for its sport utility vehicles and tractors. Rising farm incomes bolstered tractor demand for the company while strong sales of the XUV 3XO and the upcoming five-door Thar SUV helped M&M navigate an otherwise challenging year for Indian carmakers.

Meanwhile, the company also raised its growth guidance for the tractor segment to 7 percent for FY25, up from the previous 5 percent. The guidance upgrade was led by expectations of an over 15 percent growth in the tractor industry Q4 FY25, which is likely to aid tractor sales for M&M.

The combination of solid Q3 numbers and an optimistic growth outlook lifted shares of the company 2 percent higher to a record high of Rs 3,270.95 on February 10. At 09.19 am, shares of M&M were trading at Rs 3,244.10 on the NSE.

The Scorpio SUV manufacturer reported a 19 percent year-on-year rise in net profit to Rs 2,964 crore for the December quarter, up from Rs 2,490 crore in the same period last year. The auto major also posted a 20 percent increase in revenue from operations, coming at Rs 30,538 crore in Q3FY25, up from Rs 25,383 crore in Q3FY24.

Buoyed by the company's stable earnings show at a time when several other carmakers are struggling, brokerages have maintained a bullish outlook for M&M.

Nomura retained its 'buy' call on the stock with a price target of Rs 3,681 as it noted the company's tractor segment and upcoming BEV launch as key catalysts. Analysts at CLSA also rate M&M as 'outperform' with a Rs 3,510 price target, betting on the strong growth prospects for the company's electric vehicle segment. CLSA believes that while new SUV models like the XUV 3XO and Thar Roxx will drive market share for M&M, the ramp-up in EVs may continue to weigh down on margins.

Macquarie also echoed similar views as it remains optimistic over EV traction while taking into account the potential impact of EV losses on the company's overall auto margins in FY26. However, valuing the company's strong EV prospects, Macquarie raised its price target for M&M to Rs 3,643 as it retained its 'outperform' call on the stock.

Meanwhile,  Jefferies remains the most bullish on M&M with its Rs 4,075 target price along with a 'buy' call. The firm also highlighted that Q3 marked M&M’s 11th consecutive quarter of double-digit EBITDA growth. Jefferies also applauded the company for its improved margins in farm and auto, expectations of strong tractor growth in Q4, expanding portfolio, and sustained market share gains across PVs, tractors, and LCVs.

In contrast, UBS Securities held a 'neutral' rating on M&M with a price target of Rs 3,460, stating that the stock was trading above historical valuation averages, which could cap the upside. Regardless, the brokerages anticipate continued market share gains for M&M and hold a constructive outlook on the automaker.