Aug 19, 2013, 01.19 PM IST
LKP is bullish on Mahindra and Mahindra and has recommended buy rating on the stock with a target price of Rs 1034 in its August 14, 2013 research report.
LKP's report on Mahindra and Mahindra
"Mahindra and Mahindra, on the SUV side, in the absence of any new model from M&M's stable in the coming two years, competitors like Renault, Maruti and Ford will be able to steal M&M's market share in an environment which is getting difficult for UV industry tarnished by higher diesel prices and higher excise duties. On one hand where SUVs are struggling, there has been an interchange of fortunes which we can relate with the FES segment which is growing leaps and bounds. With good monsoon, higher MSPs and overall strength in the agri sector, FES segment is on a very strong footing. We therefore have increased the FES segment volume estimates, while reduced those of the UV and LCV segments. We also believe the merger of MTBL to have a negative impact on profitability in short to medium term. Softening of RM costs and stable ad spend will result in better margins though. In line with this, we have pruned down our FY14E/15E earnings estimates from Rs 60/74 to Rs 54/62 and a standalone business value at Rs 799 and subsidiaries value of 235 from its various subsidiaries. We maintain our BUY rating on the stock with a reduced target price of Rs 1034 and an upside of 18 percent from current levels,” says LKP research report.
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