Visit http://indiaer.blogspot.com/ for complete details �� ��
Mahindra & Mahindra
Upgrade estimates and target price; reiterate Buy
Robust performance; positive outlook. Driven by volumes and
a sustained, good operating performance, M&M’s 2QFY11
adjusted profit rose 23.1% yoy and 29.5% qoq. We are positive on
M&M on its core business and robust operating performance.
Reiterate Buy.
Volume-led growth. M&M’s standalone net sales growth of
19.5% yoy to `53.6bn was driven by 20.1% volume growth, while
realizations were marginally lower by 0.5% yoy.
Better-than-expected operating performance. M&M’s adjusted
EBITDA margin rose 80bp qoq to 15.8%, surpassing our
expectations of 15%. This was mainly on account of the lower raw
material-to-sales. The other positive surprise was from the higher
than expected ‘other income’ at `2bn.
9.3% (and by 9.7% for FY12e) on a 3.3% increase in volume
estimate, 60-bp higher margin expectation and higher nonoperating
income. Also, we introduce FY13e standalone EPS at
`52.5 (a 12.5% yoy rise).
Valuation and risks. We increase our target price to `899/share
from `650, based on 13.5x standalone core EPS, value of listed
subsidiaries at `173, and value of cash & other investments at
`131). Key risks are possibility of higher interest rates and
negative surprises from the overseas acquisition.
No comments:
Post a Comment