P-Sec is bullish on M&M and has maintained buy rating on the stock. The stock trades at 15x its FY09P standalone earnings.

P-Sec research report on M&M

M&M reported volume growth of 1.8% largely on account of degrowth in tractor sales volumes. UV grew by 11% y-o-y, while total four-wheeler sales grew by 11.2% y-o-y. Three-wheeler sales remained flattish up 1.5% y-o-y. The company continues to show decent volume growth in 4 wheeler segment; however the tractor sales have been sluggish.

Besides the strong performance by key subsidiaries like Tech Mahindra, MMFSL and Mahindra Gesco and improved visibility of growth thereon along with strong growth in core business make the stock attractive at current valuations.

With more value unlocking from subsidiaries, the consolidated performance is expected to be much better. The stock trades at 15x its FY09P standalone earnings. We maintain BUY.