At ₹1,583, Is It Time To Put Mahindra & Mahindra Limited (NSE:M&M) On Your Watch List?

Let's talk about the popular Mahindra & Mahindra Limited (NSE:M&M). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NSEI. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Mahindra & Mahindra’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Mahindra & Mahindra

Is Mahindra & Mahindra Still Cheap?

Good news, investors! Mahindra & Mahindra is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Mahindra & Mahindra’s ratio of 15.21x is below its peer average of 30.73x, which indicates the stock is trading at a lower price compared to the Auto industry. What’s more interesting is that, Mahindra & Mahindra’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Mahindra & Mahindra?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -3.1% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Mahindra & Mahindra. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although M&M is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to M&M, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on M&M for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Mahindra & Mahindra as a business, it's important to be aware of any risks it's facing. For example, we've found that Mahindra & Mahindra has 4 warning signs (2 are concerning!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Mahindra & Mahindra, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.