Earnings Update - MAHINDRA & MAHINDRA (MM IN) - Healthy performance led by FES - CSEC Research

Healthy performance led by FES

- M&M's revenue (M&M+MVL) grew by 4.3% YoY to INR 106.1bn. M&M's standalone revenues increased 3.3% YoY to INR 111 bn in 4QFY17. Volume grew 2.3% YoY to 188,023 units in 4QFY17. Better product mix with higher contribution of tractors benefitted Average Selling Price (+1% YoY). Revenue from Auto segment was down 2% YoY, while revenue from FES segment grew by 18.4% YoY.

- M&M's automotive volume declined 1.9% YoY to 137,770 units. Its domestic volume was down 0.3% YoY and exports volume decline 23.5% YoY in 4QFY17. Its UV volume declined 9.4% YoY, MPV volume increased 5.8% YoY, while LCV segment was up 15.2% YoY. M&M's three-wheelers volume declined 8.6% YoY.

Valuation: At CMP, the stock is trading at 17.4X and 14.5X for FY18E and FY19E EPS respectively. We assign a target P/E of 18X on FY19E consensus earnings, to arrive at a target price of INR 1,751 and maintain BUY rating.

Risks: Rising competition in UV segment, higher raw material prices.

Shares of MAHINDRA & MAHINDRA LTD. was last trading in BSE at Rs.1411.7 as compared to the previous close of Rs. 1423.45. The total number of shares traded during the day was 40927 in over 1632 trades.

The stock hit an intraday high of Rs. 1430 and intraday low of 1405. The net turnover during the day was Rs. 57813868.

Source : Equity Bulls

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