For Mahindra & Mahindra Ltd (M&M), margins stole the show in the September quarter (Q2FY26). Standalone revenue rose 21.3% year-on-year (y-o-y) to ₹33,421 crore, slightly below consensus expectations due to lower realizations. However, standalone Ebitda margin expanded 20 basis points (bps) to 14.5%, beating Bloomberg’s consensus estimate of 14%, aided by a richer product mix and improving performance in the electric vehicle (EV) segment.
The EV division, once a drag on profitability, is now contributing positively. Its Ebitda margin rose 260 bps sequentially to 6.2%, supported by the PLI (production-linked incentives) scheme. The XEV9e is already availing these benefits, while the BE6 will qualify from April 2026, adding another margin lever. Nomura Global Markets Research thinks EV margins could reach double digits by FY28 as the entire portfolio gets PLI by FY28F.
In the auto business, Ebit margin rose 30 bps sequentially to 9.2% despite a higher BEV mix and flat volumes. The auto Ebit margin (excluding BEVs) came in at 10.3%, up 80 bps y-o-y, while the farm Ebit margin improved 222 bps year-on-year to 19.7% on the back of operating leverage.
In the farm equipment segment, tractor volumes surged 32% y-o-y, prompting M&M to raise its industry growth forecast for FY26 to 10-12% from 5-7% earlier. Improved reservoir levels, higher government spending, stronger rural liquidity, and the recent GST rate cut are seen as key tailwinds.
JM Financial Institutional Securities expects farm margins to benefit from operating leverage, while strong SUV volumes, EV expansion and PLI benefits could lift auto profitability. The brokerage has raised margin estimates for FY26-27 by 50-70 bps, implying a 9.6-11.4% earnings per share upgrade.
Mahindra continues to defend its SUV leadership, gaining 390 bps in revenue market share y-o-y to 25.7%. Festive demand remained firm, with retail sales up in the mid-to-high teens. The new Bolero has received a strong market response.
Management has maintained its mid-to-high teens growth guidance for SUVs in FY26 and expects low double-digit growth in light commercial vehicles. Two refreshed internal combustion engine (ICE) models and one new launch are planned for calendar year 2026, ensuring a balanced product cycle ahead.
On Thursday, M&M announced the sale of its entire 3.53% stake in RBL Bank for ₹678 crore, representing a 62.5% gain on its investment. While this is sentimentally positive for the stock, any re-rating will depend on how the core business sustains its momentum in margins and volumes.
So far in 2025, the stock has gained 18% and trades at 25x FY27 estimated earnings, according to Bloomberg data.
