Mahindra & Mahindra (M&M) reported a healthy operational performance in Q2FY21. Standalone net sales were at Rs. 11,711 crore (up 5.7% YoY), with ASPs in automotive rising 1.6% QoQ to Rs. 7.03 lakh/unit in tractor segment rising 1.9% QoQ to Rs. 5.19 lakh/unit. Standalone EBITDA in Q2FY21 was at Rs. 1,890 crore with corresponding EBITDA margins at 16.1% (up 358 bps YoY). The margin performance was attributable to lower other expenses (down 287 bps YoY), employee costs (down 50 bps YoY). Auto segment posted ~30 bps increase in EBIT margins YoY to 4.3% while tractor margins were up strongly by ~510 bps YoY to 24.4%. Consequent standalone PAT came in at Rs. 77 crore. PAT came in substantially lower as the company took a large impairment hit of Rs. 1,150 crore on certain long-term investments.
Valuation & Outlook
We expect sales, adjusted PAT to grow at 8%, 36.2% CAGR, respectively, in FY20-23E. Continued demand traction for tractor segment along with ongoing focus on responsible capital allocation helps us maintain our constructive stance on M&M. Accordingly, we retain our BUY rating on M&M, valuing it at Rs. 760/share on SOTP basis (7.5x FY22E EV/EBITDA for base business; 30% holding company discount to its investments).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MahindraMahindra_Q2FY21.pdf
Shares of MAHINDRA & MAHINDRA LTD. was last trading in BSE at Rs.631.6 as compared to the previous close of Rs. 629.65. The total number of shares traded during the day was 11247 in over 594 trades.
The stock hit an intraday high of Rs. 633.4 and intraday low of 630. The net turnover during the day was Rs. 7103826.