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Mahindra & Mahindra Ltd.
Reco: HOLD
CMP: Rs 682
Target Price: Rs 740
Tractor volumes to remain volatile, Downgrade to HOLD
· Feb 2012 tractor volumes decline of 20% took us by a surprise. Inventory continues to remain under control at ~3 weeks. UVs and pickup volumes were above estimate
· Lower our 4QFY12/FY13 tractor volume estimates by 7%/6%. Building in flat volumes in FY13 vs earlier est. of 5% growth
· Downgrade our FY12E/FY13E EPS by 1.5%/7.2% to Rs 42.3/42.5. Lower our target EV/EBIDTA multiple to 7x (from 7.5x) due to volatility in tractor volumes
· Lower TP to Rs. 740 and rating to HOLD. Valued standalone business at Rs. 540, MVML at Rs. 60 and listed subs at Rs. 140
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