Mahindra and Mahindra has target of Rs 1100: Prayesh Jain

Prayesh Jain of IIFL told CNBC-TV18, "We have a buy rating on Mahindra and Mahindra (M&M). The auto side of the M&M business is doing badly and it is possibly one of the worst times in its history that we are seeing such a sharp slowdown in the Utility Vehicles (UV) space. They have reported 29 percent Y-o-Y fall in the UV volumes, which is a steepest fall for a pretty long period of time.”

He further added, “The entire UV space itself is actually witnessing a mark slowdown and in the past in FY13 they were pretty strong, but the kind of fuel price increases what you have seen and there is a presumption that the gap between diesel and petrol has narrowed down, but that is not the true case, it is more of absolute increase in fuel prices that is driving down the demand for the entire space.”
“If you look at Maruti Suzuki's volumes the demand seems to be shifting towards the smaller cars and the mini segment saw a pretty strong growth there and those are the petrol variants. So people are shifting towards the lower priced variants rather than sticking to the compact and super compact segments. We have a price target of Rs 1,100 on M&M over a period of time.”
“For M&M we are expecting an EPS of around Rs 60 in FY14 and around Rs 65 in FY15. If you consider the 10 times multiple, Rs 650 plus the listed stocks value itself is pretty huge, plus book value of other investments itself is pretty large. So cumulatively we have a target price of Rs 1,100.”