Accumulate M&M; target Rs 1120: Emkay

Emkay's research report on Mahindra and Mahindra (M&M)

"We do not see the Systech restructuring to have a material impact on our est/TP for M&M; for Systech complementary product/geography mix is only a longer term positive. Mahindra CIE would have revenues of ~Rs 50 bn. At 0.5x MCap/Sales implied value M&M’s 20.2% stake amounts to Rs 8/share –almost the value we ascribed to the Systech subs. Deal largely cash neutral for M&M - amount received from stake sale in Systech subsidiaries to be invested for a 13.5% stake in CIE. Upon closure of the transaction we expect the value of auto component business to inch up to Rs 15/share (vs Rs 5/share currently) in our SOTP for M&M; retain accumulate with a target price of Rs 1120," says Emkay Global Financial Services research report.

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