Buy Mahindra and Mahindra; target Rs 1186: ICICIdirect
ICICIdirect.com is bullish on Mahindra & Mahindra (M&M) and has recommended buy rating on the stock with a target price of Rs 1186 in its June 17, 2013 research report.
June 17, 2013 / 17:38 IST
ICICIdirect.com's research report on Mahindra and Mahindra (M&M)
"Mahindra & Mahindra (M&M) has entered into a multi-structured deal with Spain’s CIE Automotive, which involves sale of stake in 3 entities of the Systech Automotive components division to CIE Automotives and then subsequent merger of the entities along with CIE Automotive’s forging businesses in Spain and Lithuania into Mahindra Forgings, which will be renamed to Mahindra CIE. CIE Automotives will hold 51 percent stake in the entity and M&M will hold ~20 percent stake. Furthermore, M&M will purchase 13.5 percent stake in CIE Automotives to become the 2nd largest shareholder. There would be no significant cash outgo for M&M other than FX impact, as the stake sale in subsidiaries will fetch ~673 crore million, while M&M will purchase stake in CIE Automotives for a consideration of €96.25 million. The deal is subject to various regulatory approvals in India and Europe and is expected to be finalised till April 2014. The deal appears to be value unlocking for the shareholders in Systech’s listed entities."Impact analysis for M&M…
"The deal would not have a major impact on M&M, as the Systech business contributes ~Rs 4200 crores to the consolidated topline and the deal involves little change in economic interest for M&M. On the positive side, with complementary set of businesses w.r.t. products, geographies, clientele, technology, the agreement will see the formation of a global automotive component supply network with combined annual sales of ~|15000 crores with operations in North & South America, Europe and Asia and will enjoy economies of scale and bring other synergies to the fore. We maintain BUY recommendation on the stock with a SOTP price of Rs 1186, ascribing a 7.5x FY15E EV/EBIDTA multiple for core business," says ICICIdirect.com research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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