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About the Company
Mahindra & Mahindra is the flag ship company of Mahindra Group. Incorporated in 1945 as an assembly unit, today M&M is a
USD6.3 billion multinational company. The company has its presence in almost all segment of the automobile industry. It produces
UVs, tractors, 3-wheeler as well as 2-wheelers. M&M’s tractors are the only ‘Made in India’ tractor that is among the top tractor
brands of the world.
The company exports its products to a number of countries which includes Europe, Africa, South Africa, Middle East etc. Product
portfolio of the company can be divided mainly into three- Automotive, Farm Equipments and 2-wheelers.
Investment Rationale
The company has reported a good sales growth for Nov. 2011. Overall sales volume grew around 53% YoY. Sales stood at 40,722
units in Nov.2011 as against 26,666 units of Nov. 2010. Domestic sales grew 52% YoY to 38,159. The 4-wheeler commercial vehicle
segment grew 74% in Nov. 2011. Tractor sales stood at 17,527 units. Domestic sales of tractor declined 5% YoY while exports grew
33% YoY.
Increasing raw material price is a major concern for the company. To pass the increasing raw material price to customers, the
company is considering a price hike. The price raising will be upto 3% depending on models and it will come in effect from Jan. 2012.
Depreciating Rupee will also accelerate the export revenue of the company.
SsangYong Motor Company, a South Korean firm that M&M acquired, plans to enter the US market in 2016. SsangYong is one of
the largest SUV-makers in its home market, and has more than 1,000 dealerships across the world. M&M is trying to enter US
market for some times. But none of its efforts fructified. The acquisition of SsangYong will help the company to enter in US market.
The US Emission certificate of the company, which Environmental Protection Agency (EPA) awarded to M&M last year, is expiring in
December of this year. A legal dispute with Global Vehicles Inc (GV) of Texas over distribution and sales of its vehicles in that
country delayed the company’s entry in US market.
Valuation
At ` 693.00 the shares of M&M are trading at 12.70x to the earnings of FY13E and 10.46x to the earnings of FY14E. At the current
level, it is trading at a P/BV of 2.51x for FY13E and 2.02x for FY14E. We expect the topline and bottomline of the company will grow
at a CAGR of 24% and 14% respectively over FY11 to FY14E. We are giving buy rating for this scrip with a target price of `825.00
for long term.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
About the Company
Mahindra & Mahindra is the flag ship company of Mahindra Group. Incorporated in 1945 as an assembly unit, today M&M is a
USD6.3 billion multinational company. The company has its presence in almost all segment of the automobile industry. It produces
UVs, tractors, 3-wheeler as well as 2-wheelers. M&M’s tractors are the only ‘Made in India’ tractor that is among the top tractor
brands of the world.
The company exports its products to a number of countries which includes Europe, Africa, South Africa, Middle East etc. Product
portfolio of the company can be divided mainly into three- Automotive, Farm Equipments and 2-wheelers.
Investment Rationale
The company has reported a good sales growth for Nov. 2011. Overall sales volume grew around 53% YoY. Sales stood at 40,722
units in Nov.2011 as against 26,666 units of Nov. 2010. Domestic sales grew 52% YoY to 38,159. The 4-wheeler commercial vehicle
segment grew 74% in Nov. 2011. Tractor sales stood at 17,527 units. Domestic sales of tractor declined 5% YoY while exports grew
33% YoY.
Increasing raw material price is a major concern for the company. To pass the increasing raw material price to customers, the
company is considering a price hike. The price raising will be upto 3% depending on models and it will come in effect from Jan. 2012.
Depreciating Rupee will also accelerate the export revenue of the company.
SsangYong Motor Company, a South Korean firm that M&M acquired, plans to enter the US market in 2016. SsangYong is one of
the largest SUV-makers in its home market, and has more than 1,000 dealerships across the world. M&M is trying to enter US
market for some times. But none of its efforts fructified. The acquisition of SsangYong will help the company to enter in US market.
The US Emission certificate of the company, which Environmental Protection Agency (EPA) awarded to M&M last year, is expiring in
December of this year. A legal dispute with Global Vehicles Inc (GV) of Texas over distribution and sales of its vehicles in that
country delayed the company’s entry in US market.
Valuation
At ` 693.00 the shares of M&M are trading at 12.70x to the earnings of FY13E and 10.46x to the earnings of FY14E. At the current
level, it is trading at a P/BV of 2.51x for FY13E and 2.02x for FY14E. We expect the topline and bottomline of the company will grow
at a CAGR of 24% and 14% respectively over FY11 to FY14E. We are giving buy rating for this scrip with a target price of `825.00
for long term.
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