Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Mahindra & Mahindra
Strong quarter
Q3FY11 sales: Rs. 60.7bn (+36% YoY); robust outlook
M&M (stand-alone) revenues were slightly below our estimates at Rs.60.7bn
(UBSe: Rs.62bn). ASP increased 1% QoQ. Automotive segment revenue was up
4% QoQ, 36% YoY to Rs.34.7bn. FES revenue increased 37% YoY to Rs.26.3bn.
Mgmt. expects UV and tractor industry to grow in the range of 15-18%/10-12% in
FY12. Increase in financing rate (+250-300bps in tractors) and rising commodity
costs remain a concern.
Q3FY11 EBITDA: Rs.8.8bn (+14% YoY), PAT at Rs.7.3bn (+78% YoY)
Q3FY11 EBITDA margin (exc. other op. income) decreased 10bps QoQ to 14.4%
due to higher RM costs to sales at 69.7% vs. 68.7% in Q2FY11 partially offset by
decrease in staff costs by 3% QoQ. PAT excluding one-off gain (Rs.1.2bn) from
sale of investment was up 49% YoY to Rs.6.17bn.
Margin outlook remains strong
We believe the margin outlook remains strong given the price increases
implemented YTD (5%/3% in its tractor and automotive segment till Dec’10,
another 0.5-2% price increase in its automotive portfolio in Jan’11). Mgmt. did not
take a price hike in its tractor portfolio in Jan’11 as it believes it should be able to
offset input costs pressure through effective cost management and value
engineering.
Valuation: Maintain Buy, PT Rs 910
We value the standalone business at Rs660/shr, based on an average 8x FY12-13E
EV/EBITDA; its subsidiaries at Rs190/shr; and Ssangyong stake at Rs 60/shr..
Key conference call takeaways
The following represents our summary of the conference call:-
1. Farm Equipment segment: In Q3FY11, the industry grew 30.5% YoY.
M&M gained market share by 160 bps to 43.3% in Q3FY11 due to
strong growth in Yuvraaj (800 units/mnth) and Arjun tractors. Exports
grew 44% YoY YTD and 10% in 3QFY11 (higher base effect) due to
strong growth in US and Sri Lanka market (received a large tender
order from the government).
2. Automotive segment: In Q3FY11, the industry grew 19.5%, vs. 31.3%
YoY growth in M&M automotive sales leading to market share
expansion by 200bps to 21.7%. Co. continues to gain traction in its
LCV business, with Maxximo reaching a run-rate of 4k/m.
3. New product launches: Co. has made three significant product
launches in its automotive portfolio including Mahindra Thar in Dec’10,
Mahindra Genio in Jan’11 and Mahindra Backhoe.
4. Mahindra Genio: Mahindra Genio is a 1.2 tonne pickup based on Xylo
platform and targets the captive segment of the market. Currently the
pickup market is split 45:55 between captive and commercial segments.
5. Construction equipment: Co. has invested Rs.3bn to develop Backhoe
loader that should start selling in Mar’11. Co. expects to produce
200units/mnth from the Chakan plant.
Mahindra & Mahindra
Mahindra & Mahindra (M&M) manufactures utility vehicles (UVs), tractors,
commercial vehicles (CVs), three-wheelers and gensets. It is India's market
leader in UVs and tractors. The autos and farm equipment divisions contributed
56% to M&M's consolidated revenue in FY09. M&M, through its joint ventures
with Navistar, manufactures and markets medium and heavy CVs in India.
M&M has subsidiaries in IT services (Tech Mahindra), financial services
(M&M Financial Services), infrastructure development (Mahindra Lifespace
Developers), hospitality (Mahindra Holidays & Resorts) and auto components.
Statement of Risk
Principal risk to M&M’s earnings estimates arise from fluctuation in vehicle
sales volumes and fluctuation in raw material cost. Other businesses in the
M&M group, viz. IT, Infrastructure, financing etc are exposed to interest rate
risk, currency risk etc
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Mahindra & Mahindra
Strong quarter
Q3FY11 sales: Rs. 60.7bn (+36% YoY); robust outlook
M&M (stand-alone) revenues were slightly below our estimates at Rs.60.7bn
(UBSe: Rs.62bn). ASP increased 1% QoQ. Automotive segment revenue was up
4% QoQ, 36% YoY to Rs.34.7bn. FES revenue increased 37% YoY to Rs.26.3bn.
Mgmt. expects UV and tractor industry to grow in the range of 15-18%/10-12% in
FY12. Increase in financing rate (+250-300bps in tractors) and rising commodity
costs remain a concern.
Q3FY11 EBITDA: Rs.8.8bn (+14% YoY), PAT at Rs.7.3bn (+78% YoY)
Q3FY11 EBITDA margin (exc. other op. income) decreased 10bps QoQ to 14.4%
due to higher RM costs to sales at 69.7% vs. 68.7% in Q2FY11 partially offset by
decrease in staff costs by 3% QoQ. PAT excluding one-off gain (Rs.1.2bn) from
sale of investment was up 49% YoY to Rs.6.17bn.
Margin outlook remains strong
We believe the margin outlook remains strong given the price increases
implemented YTD (5%/3% in its tractor and automotive segment till Dec’10,
another 0.5-2% price increase in its automotive portfolio in Jan’11). Mgmt. did not
take a price hike in its tractor portfolio in Jan’11 as it believes it should be able to
offset input costs pressure through effective cost management and value
engineering.
Valuation: Maintain Buy, PT Rs 910
We value the standalone business at Rs660/shr, based on an average 8x FY12-13E
EV/EBITDA; its subsidiaries at Rs190/shr; and Ssangyong stake at Rs 60/shr..
Key conference call takeaways
The following represents our summary of the conference call:-
1. Farm Equipment segment: In Q3FY11, the industry grew 30.5% YoY.
M&M gained market share by 160 bps to 43.3% in Q3FY11 due to
strong growth in Yuvraaj (800 units/mnth) and Arjun tractors. Exports
grew 44% YoY YTD and 10% in 3QFY11 (higher base effect) due to
strong growth in US and Sri Lanka market (received a large tender
order from the government).
2. Automotive segment: In Q3FY11, the industry grew 19.5%, vs. 31.3%
YoY growth in M&M automotive sales leading to market share
expansion by 200bps to 21.7%. Co. continues to gain traction in its
LCV business, with Maxximo reaching a run-rate of 4k/m.
3. New product launches: Co. has made three significant product
launches in its automotive portfolio including Mahindra Thar in Dec’10,
Mahindra Genio in Jan’11 and Mahindra Backhoe.
4. Mahindra Genio: Mahindra Genio is a 1.2 tonne pickup based on Xylo
platform and targets the captive segment of the market. Currently the
pickup market is split 45:55 between captive and commercial segments.
5. Construction equipment: Co. has invested Rs.3bn to develop Backhoe
loader that should start selling in Mar’11. Co. expects to produce
200units/mnth from the Chakan plant.
Mahindra & Mahindra
Mahindra & Mahindra (M&M) manufactures utility vehicles (UVs), tractors,
commercial vehicles (CVs), three-wheelers and gensets. It is India's market
leader in UVs and tractors. The autos and farm equipment divisions contributed
56% to M&M's consolidated revenue in FY09. M&M, through its joint ventures
with Navistar, manufactures and markets medium and heavy CVs in India.
M&M has subsidiaries in IT services (Tech Mahindra), financial services
(M&M Financial Services), infrastructure development (Mahindra Lifespace
Developers), hospitality (Mahindra Holidays & Resorts) and auto components.
Statement of Risk
Principal risk to M&M’s earnings estimates arise from fluctuation in vehicle
sales volumes and fluctuation in raw material cost. Other businesses in the
M&M group, viz. IT, Infrastructure, financing etc are exposed to interest rate
risk, currency risk etc
No comments:
Post a Comment