Will Scorpio-N launch push M&M stock higher by 25%?

Shares of Mahindra and Mahindra (M&M) hit their all-time high today a day after the homegrown car manufacturer launched the latest edition of its popular SUV 'Scorpio-N.' The automaker claimed that the new SUV was the biggest, most powerful and most advanced version among all Scorpio models till date.

M&M stock zoomed to a record high of Rs 1,114.20, rising 3.47 per cent against its previous close of Rs 1082.05 on BSE. The large cap stock has gained 11.67 per cent in four days. Shares of M&M are trading higher than 5-day, 20-day, 50 day, 100-day and 200-day moving averages. M&M stock has gained 40.42 per cent in a year and risen 33.08 per cent in 2022.

Total 0.58 lakh shares of the firm changed hands amounting to a turnover of Rs 6.44 crore on BSE. Market cap of the firm rose to Rs 1,39,007 crore.

One can book the new Scorpio-N from July 30, 2022, at Mahindra's website and dealerships as well. The price for the new SUV starts at Rs 11.99 lakh for the entry trim and goes up to Rs 19.49 lakh (ex-showroom) for the top-end variant. The new Scorpio-N will be available in five variants - Z2, Z4, Z6, Z8 and Z8 Luxury.

Read More: Mahindra launches its biggest, most powerful Scorpio-N starting at Rs 11.99 lakh

Brokerages are bullish on the prospects of the stock post the launch of Scorpio-N.

CLSA has given a target of Rs 1,356 on the stock with a buy call.  The target price is 25.31 per cent higher than the previous close of Rs 1082.05 on BSE.

"Scorpio-N will boost M&M's SUV line-up. Advanced features at lower price points-a great value proposition for customers," CLSA said. It sees room for further improvement in volumes if chip supply eases faster.

Morgan Stanley is overweight on the stock with a target price of Rs 1,198.

On the Scorpio-N launch, Morgan Stanley said," Multiple new launches in the SUV segment underscore SUV focus of OEMs & also point towards easing supply chain issues." It believes personal vehicles will continue to lead recovery in autos.

Nomura has given a buy call with a target of Rs 1,308.

"Another potential winner. Believe new Scorpio-N should further support to transform M&M's image into that of a lifestyle SUV maker, which is expected to pay rich dividends in future" the international brokerage said.

UBS has given a buy call with a target price of Rs 1,250.

"With Scorpio-N, ride quality, handling, design and features have been significantly enhanced. Given expected success of Scorpio-N, strong order backlogs for XUV700, Thar and ramp in production, see upside risk to FY24E volume assumption," the brokerage said.

Manoj Dalmia, founder and director, Proficient Equities

"Mahindra has been recently launching variants like XUV 300,700 and Scorpio N, which are great product launches and have seen good feedback from the customers. XUV 700 saw a 45 per cent MoM growth in sales and is still in demand. The same can be expected from Scorpio which can add to their topline which can affect the stock. The stock is currently trading at Rs 1112 ,the current breakout might take it to Rs 1262 levels, also the price is above 200 day EMA which is a positive sign."

Ravi Singhal, Vice Chairman, GCL securities Limited

"As we see M&M trading at record highs, we believe this performance will continue, as many government schemes, such as the recently introduced Agniveer, are affecting the rural economy. The recently increased MSP for kharif crops, as well as Kisan Samman Nidhi, will benefit the rural economy On the other hand, we see Thar, XUV 700, and now Scorpio N doing well and demand will continue. Chip shortages are also under control, and metal prices are 20 per cent lower than their peak. The only cause for concern is that rising interest rates may reduce demand. Target price is Rs 1245 with a stop loss of Rs 970."

Ravi Singh, vice President and head of research, Share India

"The launch of the Scorpio-N is expected to boost the sales numbers of M&M. The popularity of SUVs among customers and Scorpio N's advanced features at competitive price, global launch may prove as a game changer in the SUV market. The stock of the company has already started showing the enthusiasm and in this momentum, it may touch the levels of Rs 1250 very soon."

Arijit Malakar, Head of Research, Retail, Ashika Group

"The launch of Scorpio-N would be a disruptor in the SUV segment that will help M&M in gaining its market share in SUV pace. This new launch would appeal to buyers in the mid-sized SUV and higher segments. Scorpio-N is expected to compete with the Hyundai Creta, Kia, Volkswagen Taigun and other SUV brands. M&M for past few years has been striving to gain its lost market share in SUV segment by launching XUV700 and Thar. Both the products have helped the company come back in the growth in terms of volume and profitability. The company's previous SUV launches failed to live up expectations and M&M witnessed its market share in SUV shrink from 55% in FY12 to 19% in FY22. However, a series of new upgraded launches, easing of semi conductor shortage and expectation of good monsoon in 2022 would lift the demand for its cars."