Kotak Securities' report on Mahindra and Mahindra (M&M)
M&M's 3QFY15 results were impacted by weak demand for both - auto and tractor segment, but the same were ahead of our expectation. M&M+MVML revenues were down by 10% YoY to Rs92.6bn. EBITDA margin came in at 11.7%, down from 14% in 3QFY14, due to volume decline - leading to negative operating leverage. Company reported exceptional gain of Rs2,993mn during the quarter. Reported PAT stood at Rs9,668 mn for M&M+MVL. Adjusted for one-time gain, PAT was better than expectation. Currently, M&M's sales volume in auto and tractor division are under pressure and we expect this situation to persist in 4QFY15. From FY16, we expect performance in the auto division to improve, aided by several new launches and general recovery in demand. Tractor demand too could see improvement, but that will depend on various factors. We introduce FY17 earnings and roll over our target based on FY17 estimates. We upgrade the stock to BUY (ACCUMULATE earlier) with revised price target of Rs 1,412 (earlier Rs 1,373)", says Kotak Securities research report.
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