Mahindra & Mahindra Ltd. Operating performance in line, Retain BUY ::Emkay

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Mahindra & Mahindra Ltd.

Operating performance in line, Retain BUY

BUY

CMP: Rs666                                        Target Price: Rs780

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n     Operating perf. (M&M+MVML) in line (EBITDA- Rs 9.5bn). Net profit at Rs 6.2bn (~5% below est.) due to lower PAT (Rs 134mn) of MVML (est-Rs 497mn) and lower int. income of M&M

n     Demand outlook remains strong for M&M due to superior product portfolio (traction in segments where it had limited presence) and exports

n     Increase vol. est. by 3%/2.5% and net profits by 2.3%/1.9% in FY12/13. ~6% equity dilution (AR FY11) to 655mn shares (higher ESOP) lowers our FY12/FY13 EPS by 3.3%/3.8%

n     Lower TP by ~4% to Rs 780 due to equity dilution and lower value of subsidiaries. Valued standalone business at Rs 621 (down ~5%) and listed subs at Rs 144 (down ~2%)