Mahindra & Mahindra Ltd. Volume momentum to continue, Retain BUY:: :Emkay

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Mahindra & Mahindra Ltd.

Volume momentum to continue, Retain BUY

BUY

CMP: Rs 790                                       Target Price: Rs 930

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n     Adj EBIDTA/APAT (M&M+MVML) at Rs 9.8bn/Rs7.9bn is below  our est. of Rs. 10.3bn/Rs8.3bn, largely due to M&M. M&M disappointed with margins of 12.3% vs. est. of 13% 

n     Demand outlook remains strong. Margin pressure to continue on higher production from MVML.  RM cost pressures yet to play out fully.

n     Raise M&M vol. est. by 5.7%/7.1% but lower EBITDA margins by 140 bps in FY12/13. Raise MVML volumes ~2%/17%. Lower FY12 EPS of M&M by 4% (Rs. 45.1), retain FY13 EPS (Rs. 53.6)

n      Maintain TP at Rs. 930. Valued standalone business at Rs. 720, MVML at Rs. 65 (from Rs. 45) and listed subs at Rs. 145. Key risks - complex business structure and loss at Ssangyong