Buy M&M at Rs 620 for target of Rs 760: Gaurang Shah

In a chat with ET Now, Gaurang Shah, Asst VP, Geojit BNP Paribas Financial Services, talks about the outlook of Mahindra & Mahindra and Tata Motors.

If you had to choose between Mahindra & Mahindra and Tata Motors, what would you pick?

If you would have asked me this question about 2 or 3 trading sessions ago, it would not have been Tata Motors. We had a buy coverage and a price target about Rs 940-980 for Tata Motors. My obvious choice now will be M&M because here we have a price target of about Rs 760. The farm equipment segment is experiencing significant growth and with the acquisition of Punjab Tractors, the market share is going to be of great dominance as far as Mahindra & Mahindra is concerned. Its management last time when we heard the numbers mentioned about supply side constraints where the numbers month on month could have been much better had it not been not for the supply side constraints. And, the introduction of Geo, Maximo and Navistar, newer models in these three segments is going to have a much more significant clarity in the light commercial vehicles and heavy commercial vehicles side. So, from that point of view given that you have much more orders coming in from the US market and new launches in the US markets, a significant upside from here is definitely going to be there but at Rs 650 or so. One should start buying M&M in a phased out manner. One should exhaust whatever capacity one has to get invested closer to Rs 620 and look for a target of about Rs 760 on M&M.