Religare's research report on M&M
M&M’s operating performance (M&M+MVML) for Q4FY16 was a tad below expectations, with EBITDA margins coming in at 12.5% (RCMLe 13%; +73bps YoY/-166bps QoQ) as lower tractor margins led to a slight miss on RCMLe. Adj. PAT (MM-MVML) at Rs 6.6bn too came in below RCMLe (Rs 7.2bn) due to higher depreciation. We pare our FY17/FY18 earnings estimates by 10% each to factor in lower margins due to cost pressures and phasing out of Haridwar plant excise benefits. Maintain HOLD with a Mar’17 TP of Rs 1,300.
We prune our FY17/FY18 earnings estimates by 10% each to build in lower margins and phasing out of excise benefits at Haridwar. We maintain HOLD on the stock; our Mar’17 TP of Rs 1,300 remains unchanged as the increased value of subsidiaries mitigates the earnings cut impact.
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