ICICI Direct is bullish on Mahindra CIE Automotive has recommended buy rating on the stock with a target price of Rs 275 in its research report dated May 08, 2019.
ICICI Direct's research report on Mahindra CIE Automotive
Mahindra CIE Automotive (MCI), reported steady performance in Q1CY19. Consolidated sales stood at Rs 2,068.4 crore, up 10% YoY (MCI Europe Rs 1,284.4 crore, up 14.8% YoY; MCI India Rs 793.6 crore, up 2.3% YoY). Consolidated reported EBITDA margins at 13.0% came off from the 14%+ trajectory seen in CY18, dragged by Europe operations margins at 13.1%. Standalone revenues for Q1CY19 rose by 5.0% YoY to Rs 642.6 crore with margins stood at 12.2%, up 95 bps QoQ on account of operating leverage benefit. Consequent standalone PAT stood at Rs 46.9 crore, up 21.7% YoY.
The company’s healthy return ratios (~15% RoCE) and >10% CFO yield also provide valuation comfort. We value MCI at Rs 275 i.e. 8x EV/EBITDA on CY20E numbers and retain our BUY rating on the stock.
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