Broker's call: Mahindra & Mahindra (Hold)

| Updated on October 03, 2019

Prabhudas Lilladher

Mahindra & Mahindra (Hold)

CMP: ₹562.65

Target: ₹563

Mahindra and Mahindra Limited is engaged in the manufacture of passenger cars, commercial vehicles and tractors. The Company's segments include Automotive, which is engaged in the sale of automobiles, spare parts and related services; Farm Equipment, which is engaged in the sale tractors, spare parts and related services; and IT Services, among others.

Mahindra & Mahindra (M&M) and Ford Motor company (Ford) have formed 51:49 joint venture (that will develop, market and distribute Ford brand vehicles in India and Ford & Mahindra brand vehicles in exports markets) by expanding two-year old alliance (for EV, connected vehicles and co-development of ICE products).

The joint venture, a) to get Ford’s manufacturing plants in Chennai (including powertrain) and Gujarat; b) will be managed by M&M while governance will be equally composed of both the partners; and c) will use Ford’s distribution network in emerging markets for exports of Ford and MM products. While the joint venture can bring long-term manufacturing and sourcing synergies to both the partners, we believe the limited scope of the same (only UV focused) may not result in significant financial gains for the joint venture. We maintain HOLD with price target of ₹563.

Published on October 04, 2019

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