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Buy Mahindra and Mahindra, target Rs 596: IIFL
IIFL has maintained its buy rating on Mahindra and Mahindra with a target price of Rs 596. Mahindra & Mahindra’s automotive volumes rose 9% YoY in June 2008, in line with research firm's expectation.
IIFL has maintained its buy rating on Mahindra and Mahindra with a target price of Rs 596 in its July 2, 2007 research report. "Mahindra & Mahindra's automotive volumes rose 9% YoY in June 2008, in line with our expectation, whereas tractor volumes surpassed our expectation with 19% YoY growth. Imputing a holding-company discount of 30% to listed subsidiaries and 40% to unlisted ones, M&M's subsidiaries are valued at Rs 312 per share. This implies that subsidiaries account for 70% of its current market cap. Current valuations imply an EV/EBITDA of 4x and PE of 5x on FY09ii for the core auto business. We reiterate BUY with a target price of Rs 596," says IIFL's research report.
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