Target: ₹345

CMP: ₹270.85

We recently interacted with Mahindra CIE management and following are the key takeaways: the company is targeting to take India revenue mix to about 60 per cent vs 50 per cent currently, driven by fast-growing profitable opportunities visible; strong demand from PV makers has led to the company adding capacity; about 20 per cent/25 per cent of India/EU businesses are under EV disruption risk and the management is well prepared to scale up the EV parts business to combat the risks; in EU forging operations, power cost constitutes 4 per cent of revenue ; the management is confident of sustaining India EBITDA margin at about 15 per cent and take it up to about 17-18 per cent.

In the EU, while Metalcastello is fully booked, CV forgings business continues to be under pressure and drag overall Europe margins down, with elevated gas/power costs causing the drag. The management expects FY23-24 India revenue growth in mid-to-high teens.

The company has no plans to add more CIE assets as of now though it is open to M&A opportunities to bolster the EV and plastic part portfolios.

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