ICICI Direct has given Buy recommendation for Mahindra & Mahindra with a target price of Rs. 1000 in its research report issued on Feb 07, 2021
ICICI Direct’s research report on Mahindra & Mahindra
Mahindra & Mahindra (M&M) reported a healthy operational performance in Q3FY21. Standalone net sales were at Rs 14,216 crore (up 15.2% YoY) – with automotive and tractor ASPs at Rs 6.92 lakh/unit (down 1.6% QoQ) and Rs 5.19 lakh/unit (flat QoQ), respectively. Standalone EBITDA margins at 16% dipped 12 bps QoQ, as operating leverage benefits cancelled out 150 bps contraction in gross margins. Automotive EBIT margins rose ~210 bps QoQ to 6.3% while tractor margins were down ~100 bps QoQ to 23.4%. Standalone PAT for the quarter came in at Rs 31 crore, impacted by a large impairment hit of Rs 1,692 crore in relation to long term investments.
We value it at Rs 1,000/share on SOTP basis (8.5x FY23E EV/EBITDA for base business; 20% holding company discount to its investments; previous target: Rs 870).
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