M & M (M&M)

FairStock Score: 52/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• ROE of 20.40% and ROCE of 13.93% show strong capital efficiency despite leverage.
• Sales growth of 22.54%, profit growth of 23.78%, and 5-year revenue CAGR of 16.47% show solid compounding.
• Piotroski F-score of 7/9 and Altman Z-score of 3.04 indicate healthy operational and solvency position.
• Current ratio of 2.54 provides strong short-term liquidity.

Concerns

• Valuation is steep: P/E 26.44, P/B 4.57, PEG 2.48, and Graham Number ₹1,376.85 against price ₹3,047.70 leaves no margin of safety.
• Free cash flow is deeply negative at ₹-15,440 crore despite reported profits, suggesting heavy capital expenditure or working capital strain.
• Debt/Equity of 1.53 and EV/EBITDA of 371.56 point to high leverage and aggressive market pricing.
• Promoter holding of only 18.45% is low for an Indian company, and dividend yield of 0.74% is weak for patient shareholders.

AI Analysis

M&M is a strong Indian franchise in passenger vehicles and utility vehicles, and the recent numbers confirm the underlying business is performing well. Return on equity is 20.40%, return on capital employed is 13.93%, and profit grew 23.78% in the latest period. The five-year revenue CAGR of 16.47% and latest sales growth of 22.54% point to a company that is compounding at a respectable pace. A Piotroski F-score of 7/9 and Altman Z-score of 3.04 tell me the balance sheet is not near distress, and a current ratio of 2.54 provides a decent liquidity cushion. But the price matters enormously. At ₹3,047.70, the stock trades at 26.44 times earnings and 4.57 times book value. The Graham Number is ₹1,376.85 — that leaves a margin of safety of negative 146.75%. For a business that also has debt-to-equity of 1.53 and negative free cash flow of ₹-15,440 crore, the risk-reward is simply not in my favour. An EV/EBITDA of 371.56 screams that the market has priced in perfection. The PEG ratio of 2.48 is too high for an auto manufacturer, which is inherently cyclical. The dividend yield of 0.74% is too small to cushion a long wait. I also note promoter holding is only 18.45%, which is low by Indian standards and creates governance questions. The FairStock score of 53/100 — mixed — seems honest. This may be a wonderful business, and M&M has proven its ability to grow. But at this valuation, I am not being paid to take the risk. In Graham's language, there is no margin of safety. I would rather wait patiently for Mr. Market to offer a lower price.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer