SPA Research has recommended hold rating on Mahindra and Mahindra (M&M) with a target of Rs 921, in its February 12, 2013 research report.
“M&M reported better than expected set of numbers driven by robust SUV and pick up sales. Revenues during the quarter were aided by better product mix and improved realizations. EBITDA margin was down by 96 bps YoY & 16 bps QoQ to 11.2percent. PAT margin stood at 7.8percent, down by 14 bps YoY & 143 bps QoQ as the company had received a robust dividend income from its group companies in Q2FY13.”
“M&M reported net sales of INR 107743 mn, up by 28.5percent YoY and 9.8percent QoQ. Revenues for the quarter were aided by strong growth in volumes for its Utility Vehicles & Pick-ups (up by 23.7percent YoY). The Company had increased the price three times (recently in January by ~1-3percent) in automotive segment & by ~4.6percent in the tractor segment YTDFY13 to compensate for the increase in price of raw materials. Automotive segment volumes stood at 144466 units in Q3FY13, up by 18.7percent YoY and 4.3percent QoQ, resulting in its overall market share to increase from 12.4percent to 13.7percent. Realization in the segment stood at INR 509504/unit, up by 21percent YoY due to higher share of premium SUVs. EBITDA Margin in Q3FY13 contracted to 11.24percent, down by 96 bps YoY & 16 bps QoQ led by higher COGS (75.9percent of sales in Q3FY13 against 74.4percent of sales in Q3FY12). EBITDA margin of M&M+MVML stood at 13.47percent, down by 32 bps YoY & 36 bps QoQ. PAT margin stood at 7.76percent, down by 14 bps YoY & 143 bps QoQ.”
“M&M has been able to outperform the automobile sector in Q3FY13 largely on the back of new launches, better product mix and strong demand in its UV's & pick-ups segment. The company's overall market share grew by 130 bps to 13.7percent. With strong demand for XUV5OO, SUV Quanto and pick-ups, we remain positive on the company. We expect M&M's standalone topline & bottomline to register a growth of 10.5percent & 9.5percent respectively in FY14. We retain our "HOLD" recommendation with a revised target price of 921 based on SOTP valuation over a period of 9 months,” says SPA Research report.
Public holding more than 90% in Indian cos
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