M&M: Above est; Volume growth of 32% YoY:: Motilal Oswal

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 M&M: Above est; Volume growth of 32% YoY (~11.6% MOM) to 58,776 unit (v/s est 52,200 units); Strong performance in UVs & Tractors as bottleneck eases; Buy

-          M&M’s volumes grew 32% YoY (11.6% MoM) to 58,776 units (v/s est 52,200), driven by strong growth in UVs and Tractors.

-          UV volumes improved 36% YoY (flat MoM) to 27,189 units (v/s est 23,000), driven by newly launched small trucks, Gio and Maximmo, and continued strong demand for existing portfolio. Maximmo has garnered market share of over 17%. Our FY11 estimates factor in 15% YoY growth in UV volumes, implying residual monthly run rate of 21,510 units (residual growth of 10%).

-          Tractor volumes grew by 29% YoY (39% MoM) at 24,281 units (v/s est 21,500). Our FY11 estimates factor in 15% YoY volume growth for tractors, implying residual monthly run rate of 16,307 units (residual growth of 12%).

-          3-wheeler volumes grew 31% YoY (~10% MoM decline) to 5,410 units (v/s est 6,000). Our FY11 estimates factor in 40% volume growth for 3Ws, implying a residual monthly run rate of 7,413 units (~11% residual growth).

-          Supply-side constraints due to shortage of radial tyres, fuel injection equipments and castings has eased-off and would drive volumes in 2HFY11. It lost volumes of ~5,000 units in 2QFY11 due to these bottlenecks.

-          Our estimates factor in 19% volume growth in FY11 (implying residual monthly run rate of 47,203 units) and 60bp decline in EBITDA margins to 15.6%. On a consolidated basis, the stock trades at 12.7x FY11E of consolidated EPS of Rs57.7 and 10.7x FY12E of consolidated EPS of Rs68.3. Maintain Buy.