Axis Direct's research report on M&M
M&M's (+MVML^) Q1 EBITDA was in line with est, driven by strong margin performance offsetting weak revenue growth. M&M has increased its FY17 tractor growth guidance to 13%-16% (vs.10% earlier) on above normal monsoon and higher sowing. In UVs, M&M has filled all product gaps last year and it will build on these launches.
After two bad monsoons, a good one this year can aid a sharp recovery in rural demand. In our view, M&M’s new compact UVsare not its best attempt, but outlook for its rural-facing businesses (tractors & majority of its UVs) could turn favorable. Our earningsestimate islargely unchanged, however we downgrade the stock to HOLD with SoTP-based TP of Rs 1,482on limited upside.
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