Comments
Bonanza
M&M (Buy)
CMP: ₹910.65
Target: ₹1,172
Recently, the stock price of Mahindra & Mahindra (M&M) corrected by about 4 per cent from 52-week high of ₹940 despite reporting good set of numbers in the recent quarters.
M&M is considered pioneer in developing UV market in India with its famous brands such as Scorpio and Bolero. It had phenomenal success during FY09-14 when its volumes grew by 27.3 per cent CAGR with 44 per cent market share.
With pioneer in developing UV market in India, launching of new models and variants, only car maker in India that sells electric cars, plans to set up 5,000 a month EV production capacity, high market share in tractor business and higher demand on normal monsoons and improved rural sentiment, we value M&M at 15.82x FY20E EPS of ₹70.60 to arrive at target price of ₹1,117, an upside of about 22 per cent.
Risks: a) Large part of M&M’s business (tractor and UV) depends on good monsoon and may impact due to weak monsoon in the country. b)Stiff competition from domestic players in CV segment may impact M&M’s performance. c) Any regulatory hurdle arising out of diesel engine ban on 2,000CC+ being implemented in other parts of the country also.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.