About 70-75% of M&M’s fair value is derived from its core earnings in the automotive and farm equipment businesses. The remaining value comes from its stakes in Tech Mahindra, Mahindra Financial, Mahindra Lifespace, Mahindra Logistics, and Mahindra Holidays.
M&M’s capital allocation policy, which includes a 3.53% stake in RBL Bank, is closely watched by investors. The success of this policy will affect the medium-term trend of the stock. The reduction of non-core exposures has helped boost M&M’s market capitalization over the past two years.
M&M’s stock has gained 93% in the past two years, compared to a 20% climb for the Nifty 50 index, thanks to a favorable analyst re-rating and the company’s focus on its core businesses.
ET Intelligence Group reports that M&M’s capital allocation policy, which recently involved acquiring a stake in RBL Bank, is being closely monitored by investors. The success of this policy will likely impact the future performance of the stock, as M&M has successfully reduced its non-core exposures to enhance its market capitalization over the past two years. The stock has gained 93% while the Nifty 50 index has climbed by only 20%, reflecting the positive re-rating by analysts and M&M’s emphasis on its core operations.