Mahindra & Mahindra Limited (M&M), which is a household name in the Indian automobile industry, has witnessed a phenomenal rise in its share price in recent years.
This sudden upsurge has surprised all trade analysts and investors, prompting the question: What contributing elements are behind this tremendous growth in the M&M share price chart? This blog will explore the factors behind M&M’s share price growth and their key drivers.
Mahindra & Mahindra (M&M) History
Mahindra & Mahindra Limited (M&M) is a Maharashtra-based company. It operates in the automobile as well as farm equipment division in the country. Established in 1945, M&M has expanded into automotive, farming equipment, aerospace, defense business, manufacturing of EVs, and technology solutions.
M&M is an Indian multinational company established in Mumbai that has a significant number of dealerships and distributors around the globe, emphasizing innovation, product quality, and environmental responsibility in its business model.
Factors Responsible for the Tremendous Growth
Analyzing M&M’s financial statistics over the past few years it can be seen that several factors have led to high growth in their share price. Some of them are discussed below:
1. A Strong Domestic Market
Domestic demand is an important and strong factor that helps MNCs to cope with volatile global markets.M&M is one of the biggest leaders in the Indian tractor market, with a market share of over 40 percent.
This has been due to its understanding of the Indian agricultural sector and its ability to deliver tractors suited to the Indian environment. An increase in good monsoons, more attention by the Government for agriculture, and the growing mechanization of farms have led to an increase in the demand for tractors.
Due to this M&M has posted healthy sales and operating profits, which can be seen in M&M’s share price.
2. Diversification Beyond Tractors
Tractors still constitute the largest share of M&M’s revenue stream, but now the company has adopted a more diversified approach. The automobile sector is significantly strong for M&M in the passenger as well as the commercial vehicle segment with vehicles such as the Bolero SUV and the Thar gaining popularity.
Also, it operates a major business in farm equipment and two-wheeler divisions. This diversification reduces risk exposure and enables M&M to leverage growth in different sectors of the economy.
This has also been complemented by steady sales increases in other segments apart from tractors, which has increased investor confidence as demonstrated by the increase in the M&M share price, which is currently Rs. 2,850+.
3. The Electric Vehicle (EV) Revolution
M&M has recognized that the shift towards electric vehicles is huge in the initial days and the company is also a part of this growing market. The company has expanded significantly in the e-mobility space across segments, such as passenger vehicles, three-wheelers, and tractors.
This kind of approach makes M&M a key player in India’s future mobility landscape. Investors are optimistic about M&M’s EV prospects, leading to a positive impact on the M&M stock price.
4. Strategic Expansion through Mergers and Acquisitions
M&M has been very strategic in undertaking mergers and acquisitions (M&A) as it seeks to expand its operations and enhance its capacity. SsangYong Motor Company of Korea is the most notable example that helped M&M to gain a significant market presence in the international SUV market.
Moreover, the company has invested in electric vehicle companies and technology firms thus cementing its position in the EV market. These strategic M&A activities have built confidence among investors in M&M’s growth strategy, and increased M&M’s share price.
Conclusion
The remarkable surge in M&M’s share price is the result of multiple contributing reasons. The corporation has benefited greatly from its leading position in the tractor industry, strategic diversification, aggressive EV policy, and effective M&A initiatives. To invest in M&M and other stocks, open an account with Dhan.
