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C u t a b o v e t h e r e s t …
Mahindra and Mahindra (M&M) reported a disappointing margins
performance for Q1FY12. The topline came in at | 6,673.2 crore (I-direct
est: | 6,776.9 crore) higher 29.3% YoY as automotive, farm (FES)
segment growth of 23.8%, 19.9% YoY. The price hike (1-1.5%) taken in
Q1FY12 has led to blended realisation improvement of 2.2% QoQ in auto
and 1.2% QoQ in FES segment. On EBITDA margins front it saw QoQ
improvement of 50 bps QoQ to 13.4% as input costs stabilised and lower
employee costs (~400 bps lower QoQ).The personnel costs continue to
be higher due to ESOP amortization charge of ~|26 crore. The PAT came
in at below our expectations and in-line with market expectations. The
PAT came in at |604.9 crore (I-direct est.:631.2 crore).
Highlights of the quarter
M&M remains a dominant player in both the automotive and FES
segment. It has witnessed volume growth of ~24% YoY in the
automotive segment at 106,895 units outperforming the PV industry
growth of ~10%. In the FES M&M has improved significantly its market
leadership position with a market share of ~44% (up~2.3% YoY) with
volumes of 60,152 (up ~20% YoY) units. This was led due to a
combination of aggressive increase in pan-Indian distribution network and
better product portfolio range (from Arjun to Yuvraj). M&M continues to
bear the expense towards VAT benefit changes from the Maharashtra
govt. which has dented the margins by ~80 bps. The management
continues to remain positive on a resolution of the same in coming
periods.
V a l u a t i o n
M&M has witnessed stronger than industry volume growth in the autosegment and continues to gain market share in the FES segment. We
believe the strong domestic volume out-performance would continue
supported through newer launches expected to happen in FY12E. At the
current price of | 693, the stock is trading at 6.9x FY13E EPS of | 50.3. We
value on SOTP basis with the standalone business valued at a price of |
548/share, the subsidiaries (listed/unlisted) are valued at | 227/share.WQe
arrive at a target price of |775 with an upside potential of 12%.We
maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C u t a b o v e t h e r e s t …
Mahindra and Mahindra (M&M) reported a disappointing margins
performance for Q1FY12. The topline came in at | 6,673.2 crore (I-direct
est: | 6,776.9 crore) higher 29.3% YoY as automotive, farm (FES)
segment growth of 23.8%, 19.9% YoY. The price hike (1-1.5%) taken in
Q1FY12 has led to blended realisation improvement of 2.2% QoQ in auto
and 1.2% QoQ in FES segment. On EBITDA margins front it saw QoQ
improvement of 50 bps QoQ to 13.4% as input costs stabilised and lower
employee costs (~400 bps lower QoQ).The personnel costs continue to
be higher due to ESOP amortization charge of ~|26 crore. The PAT came
in at below our expectations and in-line with market expectations. The
PAT came in at |604.9 crore (I-direct est.:631.2 crore).
Highlights of the quarter
M&M remains a dominant player in both the automotive and FES
segment. It has witnessed volume growth of ~24% YoY in the
automotive segment at 106,895 units outperforming the PV industry
growth of ~10%. In the FES M&M has improved significantly its market
leadership position with a market share of ~44% (up~2.3% YoY) with
volumes of 60,152 (up ~20% YoY) units. This was led due to a
combination of aggressive increase in pan-Indian distribution network and
better product portfolio range (from Arjun to Yuvraj). M&M continues to
bear the expense towards VAT benefit changes from the Maharashtra
govt. which has dented the margins by ~80 bps. The management
continues to remain positive on a resolution of the same in coming
periods.
V a l u a t i o n
M&M has witnessed stronger than industry volume growth in the autosegment and continues to gain market share in the FES segment. We
believe the strong domestic volume out-performance would continue
supported through newer launches expected to happen in FY12E. At the
current price of | 693, the stock is trading at 6.9x FY13E EPS of | 50.3. We
value on SOTP basis with the standalone business valued at a price of |
548/share, the subsidiaries (listed/unlisted) are valued at | 227/share.WQe
arrive at a target price of |775 with an upside potential of 12%.We
maintain our BUY rating on the stock.
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