M&M outpaces industry with 10.5% Q1 growth, gains market share across segments, says Siddhartha Khemka
Favourable Rabi harvest earnings and steady demand from key agricultural states underpinned the strong start to the fiscal year.
The 41–50HP segment remained the industry’s growth engine, expanding 13.5% YoY and commanding 65.2% of total volumes—up from 47.3% in FY19—reflecting an 8.4% CAGR over FY19–25.
The sub-30HP category grew 21.3% YoY, supported by horticulture adoption and demand from small farmers, while the 31–40HP range contracted 4.2% YoY, continuing its -3% CAGR decline since FY19.
This underlines a long-term structural shift toward higher HP tractors, aligned with advanced mechanization needs.
Regionally, West and North India together accounted for 72.6% of Q1 volumes. West India has emerged as the dominant market, its share climbing from 28.9% in FY19 to 38.6% in Q1FY26, aided by sustained demand growth.South India’s share, however, has dropped from 19% to 13.7% over the same period despite a 21.9% YoY rebound in the latest quarter. East India also posted a sharp 27.6% YoY recovery from a low base, reaching a 13.8% share.According to ICRA estimates, the industry is poised to grow 4–7% in FY26, supported by rising higher HP penetration, government-backed mechanization initiatives, and efficiency-focused farming practices. However, industry players remain watchful of monsoon performance and rural liquidity, alongside the pace of recovery in weaker geographies.With the 41–50HP category now dominating sales, a favourable regional mix, and improving mechanization trends, the sector is set to sustain its role as a key driver of India’s rural economy and agricultural machinery market in the medium term.
M&M: Buy| Target Rs 3,687
M&M is well-positioned for long-term growth, backed by a robust product pipeline through 2030, with key ICE SUVs, BEVs, & LCVs set to launch in CY26. Geographic strength in high-demand tractor markets and favourable rural demand recovery further support volumes.
In Q1FY26, M&M outperformed the tractor industry with 10.5% YoY volume growth and expanded its market share to 45.2%, gaining ground across all HP segments—especially in the dominant 41–50HP category (65% of industry volumes).
Regional gains in East and West India reflect deep rural penetration and effective distribution. The company targets a 7% volume CAGR over FY25–27E, supported by new launches and rural tailwinds. We estimate ~14%/13%/16% CAGR in revenue/EBITDA/PAT over FY25–27E.
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