mahindra & mahindrafebruary 11,...
TRANSCRIPT
ICIC
I S
ecurit
ies –
Retail E
quit
y R
esearch
Result
Update
February 11, 2020
CMP: | 525 Target: | 680 (30%) Target Period: 12 months
Mahindra & Mahindra (MAHMAH)
BUY
Base case valuations to prevail, EV edge a positive…
Mahindra & Mahindra (M&M) reported a muted Q3FY20 performance.
Standalone net sales at | 12,345 crore were down 5.5% YoY (automotive
down 5.5%, tractor down 7.7%) and tracked 7.6%, 7.0% YoY decline in
automotive, tractor volumes, respectively. Standalone EBITDA margins at
13.4% (up 80 bps QoQ) reflected savings in other expenses. Automotive
EBIT margins improved 170 bps QoQ to 5.7% while tractor margins were up
30 bps QoQ to 19.6%. Consequent standalone PAT for the quarter came in
at | 306.0 crore, down 49.5% YoY, impacted by provision for impairment on
certain investments amounting to | 600 crore.
Leader in tractor, UV segment
M&M is a leading tractor manufacturer domestically with leading market
share of ~42% in the domestic market. The company has a strong presence
in the southern as well as western regions, which are expected to stage a
strong recovery courtesy robust rainfall activity and healthy Rabi crop
sowing. Given the underpenetrated market domestically, we expect M&M to
continue its market leadership in farm mechanisation with tractor volumes
expected to grow at CAGR of 7.4% in FY20-22E. In the domestic PV space,
M&M is a prominent player in the UV space with market share at ~20% as
of January 2019. The UV segment has emerged as one of the few bright
spots in the Indian automotive space during the ongoing slowdown
(domestic UV volumes up 6% YoY for 10MFY20 vs. 15.4% PV decline)
courtesy a shift in buyer preferences, compelling products and entry of new
players. The company’s future product plans (internal and jointly developed
with Ford) stand it in good stead to be among the beneficiaries of the market
leader exiting diesel UVs under BS-VI.
Gradual recovery, BS-VI transition to limit margins!
Given demand challenges being faced by domestic automotive segment in
medium term (M&M auto volumes likely to be down ~11% in FY20E), the
company is seen having limited operating leverage benefits. Ability to pass
on BS-VI price hikes (especially diesel) is also seen weighing on margins,
with matters compounded by firming of outlook for commodity prices. We
factor in moderate margin recovery in FY20E-22E to 11.8% in FY22E.
Valuation & Outlook
We expect sales, adjusted PAT to grow at 9.5%, 3.4% CAGR, respectively,
in FY20E-22E. M&M is one of the early movers in the domestic EV category
with products across the 3-W as well as PV segment. Price point of recently
launched e-KUV (~| 8.25 for fleet) is also encouraging to make further
inroads in EV penetration. We maintain BUY rating on the stock. We value
M&M at | 680/share i.e. 6x EV/EBITDA for standalone business (FY22E basis)
and 35% holdco discount on its investments.
Key Financials FY18 FY19 FY20E FY21E FY22E CAGR (FY20E -22E)
Net Sales 48,685.6 53,614.0 49,473.6 54,511.6 59,370.1 9.5%
EBITDA 6,224.1 6,639.6 6,302.5 6,275.6 6,984.8 5.3%
EBITDA Margins (%) 12.8 12.4 12.7 11.5 11.8
Net Profit 4,356.0 4,796.1 4,829.3 4,069.8 4,542.1 -3.0%
Adjusted Net Profit 4,046.5 4,818.6 4,250.6 4,069.8 4,542.1 3.4%
EPS (|) 35.0 38.6 38.8 32.7 36.5
P/E 15.0 13.6 13.5 16.0 14.4
RoNW (%) 13.4 14.1 11.3 10.0 10.3
RoCE (%) 16.6 16.7 13.7 12.4 12.8
Key Financial Summary
Source: ICICI Direct Research, Company
Particulars
Particular Amount
Market Capitalization (| crore) 65,268.0
Total Debt (FY19, | crore) 2,480.3
Cash and Investments (FY19, | crore) 6,733.9
EV (FY19, | crore) 61,014.4
52 week H/L (|) 704 / 503
Equity capital (| crore) (FY19) 595.8
Face value (|) | 5
Key Highlights
Revenues dip 5.5% YoY in Q3FY20
amid 5.5%, 7.7% fall in automotive,
tractor revenues, respectively.
Automotive, tractor volumes
declined 7.6%, 7.0% YoY,
respectively
Overall margins improved 80 bps
sequentially to 13.4%, with both
automotive and tractor EBIT
margins also up QoQ
Presence in fast growing UV
segment; tractor market leadership
to help support overall operations
Maintain BUY with unchanged
target price of | 680 on SOTP basis
Research Analyst
Shashank Kanodia, CFA
Jaimin Desai
ICICI Securities | Retail Research 2
ICICI Direct Research
Result Update | Mahindra & Mahindra
Exhibit 1: Variance Analysis
Q3FY20 Q3FY20E Q3FY19 YoY (%) Q2FY20 QoQ (%) Comments
Total Operating Income 12345.3 12303.3 13070.4 -5.5 11076.1 11.5 Topline broadly in line with our estimates
Raw Material Expenses 8649.2 8436 9407 -8.1 7677 12.7 RM costs came in higher at 70.1% of sales, up 80 bps QoQ
Employee Expenses 759.4 738 778 -2 719 6
Other expenses 1287.2 1,384 1,369 -6.0 1,289 -0.2Savings realised in other expenses, which for the quarter were
at 10.4% of sales, down 120 bps QoQ
EBITDA 1649.5 1,745.0 1,517.2 8.7 1,391.0 18.6
EBITDA Margin (%) 13.4 14.2 11.6 175 bps 12.6 80 bps EBITDA margins came in lower at 13.4% of sales vs. our
estimate of 14.2%, primarily tracking increase in RM costs
Other income 206.3 238.7 340.9 -39.5 827.7 -75.1
Depreciation 553.7 567 474 16.9 540 2.6
Interest 22.4 30 25 -10 30 -26
Tax 372.5 349 203 83.6 436 -14.6Tax rate looks optically higher at 52% of PBT courtesy | 600
exceptional provision on a/c of impairment of investment
PAT 306.5 1037 1077 -71.5 1213 -74.7PAT came in lower tracking lower margins and exceptional
charge (| 600 crore)
EPS 4.6 8.3 9.2 -49.5 9.8 -52.4
Key Metrics
Auto revenues (| crore) 7642.1 7,626 8,084 -5.5 7,030 8.7 Auto segment revenues broadly in line with our estimates
FES revenues (| crore) 4277.8 4,228 4,634 -7.7 3,631 17.8FES segment revenues came in slightly better tracking beat on
ASPs, which for the quarter were at | 5.06 lakh/unit
EBITDA margins (%) 13.4 14.2 11.6 175 bps 12.6 80 bps
Source: Company, ICICI Direct Research
Exhibit 2: Change in estimates
FY22E
(| Crore) Old New % Change Old New % Change Introduced Comments
Revenue 50,996 49,474 -3.0 56,304 54,512 -3.2 59,370
Broadly maintain our topline estimates for FY20-21E.
Introduce FY22E numbers. Expect topline to grow at
CAGR of 9.5% over FY20-22E
EBITDA 6,617 6,302 -4.8 6,539 6,276 -4.0 6,985
EBITDA Margin
(%)
13.0 12.7 -26 bps 11.6 11.5 -9 bps 11.8
Broadly maintain estimates. Optically, margins will
go down over next two years given BS-VI costs
increase and associated increase in vehicle prices
on absolute basis
PAT 5,738 4,829 -15.8 4,287 4,070 -5.1 4,542
EPS (|) 46.2 38.8 -15.8 34.5 32.7 -5.1 36.5
Exceptional loss in Q3FY20 leads to decline in PAT
estimates for FY20E. On normalised basis, expect
PAT to grow at CAGR of 3.4% over FY20-22E
FY20E FY21E
Source: Company, ICICI Direct Research
Exhibit 3: Assumptions
Comments
Units FY18 FY19 FY20E FY21E FY22E FY20E FY21E
Automotive volumes 548,664 608,597 544,372 555,780 589,581 556,692 572,165Automotive segment volumes seen growing at 4.1%
CAGR over FY20-22E, albeit post declining ~11% YoY
Automotive ASP's (|) 580,009 580,892 592,229 649,603 659,397 605,374 660,681
FES Volumes 318,538 330,436 306,040 321,342 352,878 308,692 324,127Tractor segment sales volume seen growing at CAGR
of 7.4% in FY20-22E, post declining 7.4% YoY in FY20E
FES ASPs (|) 505,232 510,679 506,586 512,821 520,539 503,688 510,396
EarlierCurrent
Source: ICICI Direct Research
ICICI Securities | Retail Research 3
ICICI Direct Research
Result Update | Mahindra & Mahindra
Conference Call Highlights
Demand and management outlook/guidance
M&M said Siam has pegged FY21E automotive volume growth at 3-5% YoY (PV 2-4%, CV 4-6%). On the tractor
side, the company sees 5-7% YoY growth for Q4FY20E, lifting FY20E volume decline to ~7% against ~9% decline
on 9MFY20 basis. FY21E growth is seen at 5% (+/- 2%)
The management sees full domestic recovery as still being a couple of quarters away. However, some green
shoots (such as 8% increase in Rabi acreage) are visible
Sales, costs and margins
Q3FY20 margin performance was helped by improved product mix, soft commodity prices and focused material
cost reduction efforts
Excluding the impairment hit and other one-offs, PBT and PAT were up 1.7% and 6.5% respectively on a
normalised basis
SsangYong update
As per prudent accounting practices, the company provided a non-cash charge of | 602 crore (~57 billion Korean
Won) on its subsidiary SsangYong Motor (SYMC) that has been facing domestic and international headwinds
The management said that SYMC fortunes were hit hard as the company was just about near breakeven territory
before the sharp industry downturn in Q2FY20
The company has invested | 2,450 crore in total in SYMC so far. M&M said that the subsidiary has been CFO
positive every year bar CY19
SYMC board has approved a three-year business plan geared towards achieving breakeven in CY22. As per the
plan the company is looking for a fund infusion of ~450-500 billion Korean Won (could be external borrowings,
investment by M&M or funding by an external partner). Plan focus would be in areas of volumes, costs and
efficiencies. As a tangible development thus far, agreements are in place with labour unions for temporary
reduction in worker compensation. Additionally, the company is targeting 3-4% reduction in material costs p.a.
(worth ~90 billion Korean Won). Further, SYMC will align with M&M for upcoming product development in C & B
segment SUVs and sharpen focus on exports (particularly Russia and Vietnam)
Conversations are ongoing for equity investment by outside parties into SYMC
BS-VI
M&M intimated that cost increase under BS-VI for petrol is at ~|20,000/unit and for diesel at ~| 50,000-70,000/unit
For BS-VI the company has been able to pass on all costs and some margins on petrol models i.e. XUV300,
KUV100. Extent and timing of passing on prices for diesel models would be taken on SKU by SKU basis
Supply of a BS-IV component from China is held up due to ongoing virus outbreak, and affects ~ 2,400 units of
inventory
Products
Over the next 18-24 months, the company would be coming out with following new products –
- Q1FY21: E-KUV100, New Thar
- Q2FY21: Mass mobility EV Atom
- Q4FY21: W601 (crossover SUV)
- Q1FY22: Z101
- Middle of CY21: E XUV300, new tractor platform
The company is developing (with Mitsubishi) a new tractor platform (K2) which will span four hp ranges, for both
domestic and international markets
JV with Ford
Ford would shortly be introducing a connected vehicle jointly developed as part of the JV. C-segment SUV is
expected to deliver ~| 1,000 crore in savings because of the collaboration, with similar savings seen for B-
segment SUV as well. Further, using Ford’s unused capacity for engines is expected to deliver ~| 400 crore in
savings
ICICI Securities | Retail Research 4
ICICI Direct Research
Result Update | Mahindra & Mahindra
Electric Vehicles
On electric side, the company currently sells 500 units of lithium ion 3-W (Treo) per month & 1,000 units of lead
acid 3-W (e-Alfa) p.m. It expects 3-W to be the biggest growth segment given commercial viability for operators
Newly launched E KUV100 is seen as breaking even at commercial level for fleet operators at the introductory
price of | 8.25 lakh/unit. For M&M the SKU would become EBITDA positive at volumes of ~500 units per month
Mahindra Electric is expected to turn profitable in FY21E
Others
Maximum capex for FY20E, FY21E and FY22E (combined, including any investment into SYMC) stands at | 17,000
crore
Automotive inventory levels lower than usual, while tractor inventories are at normal levels
Combined cash generation in domestic automotive and tractor businesses stood at the highest level in five years
during Q3FY20
Plant inventory at Mahindra US is down 40%, with dealer inventory down 20%. M&M is hopeful of completing
turnaround here by next year
ICICI Securities | Retail Research 5
ICICI Direct Research
Result Update | Mahindra & Mahindra
Financial story in charts
Exhibit 4: Topline trend
44054
48686
53614
49474
54512
59370
7.8
10.5 10.1
(7.7)
10.2
8.9
(10)
(5)
-
5
10
15
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
FY17 FY18 FY19 FY20E FY21E FY22E
(%
)
(| crore)
Total Operating Income Growth (%)
Source: Company, ICICI Direct Research
Exhibit 5: Segment wise revenue trend
7,115
9,136
8,188
8,639
8,084
10,442
8,101
7,030
7,642
4,098
3,716
5,007
4,028
4,634
3,206
4,382
3,631
4,278
0
1,500
3,000
4,500
6,000
7,500
9,000
10,500
12,000
Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20
(| crore)
Automotive Farm Equipment
Source: Company, ICICI Direct Research
Exhibit 6: Segment wise volume trend
129
165
140
151
143
175
132
120
132
82
71
101
78
91
61
86
72
84
0
20
40
60
80
100
120
140
160
180
200
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
Q3FY20
(000's
)
Automotive Farm Equipment
Source: Company, ICICI Direct Research
We expect sales to grow at a CAGR of 9.5% over
FY20E-22E
Segment wise revenue mix for quarter i.e. Q3FY20
was at automotive: tractor:: 64:36
In Q3FY20; automotive segment volumes declined
7.6% YoY to 132k units while sales for tractors
declined 7.0% YoY to ~84k units
ICICI Securities | Retail Research 6
ICICI Direct Research
Result Update | Mahindra & Mahindra
Exhibit 7: EBITDA and EBITDA margin trend
4515
6224
6640
6302
6276
6985
10.2
12.8
12.4
12.7
11.5 11.8
8
10
12
14
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FY17 FY18 FY19 FY20E FY21E FY22E
(%
)
(| crore)
EBITDA EBITDA Margins (%)
Source: Company, ICICI Direct Research
Exhibit 8: Profitability (adjusted PAT) trend
3220
4046
4819
4251
4070
4542
2.1
25.7
19.1
(11.8)
(4.3)
11.6
(15)
(10)
(5)
-
5
10
15
20
25
30
-
1,000
2,000
3,000
4,000
5,000
6,000
FY17 FY18 FY19 FY20E FY21E FY22E
(%
)
(| crore)
PAT Growth (%)
Source: Company, ICICI Direct Research
Exhibit 9: Return ratios trend
14.0
16.6 16.7
13.7
12.4
12.8
12.0
13.4
14.1
11.3
10.0 10.3
8
11
14
17
20
FY17 FY18 FY19 FY20E FY21E FY22E
(%
)
RoCE RoE
Source: Company, ICICI Direct Research
We build in 12.7%, 11.5% & 11.8% as EBITDA
margins in FY20E, FY21E and FY22E, respectively
Adjusted PAT CAGR is expected to grow at 3.4%
CAGR over FY20E-22E to | 4,542 crore.
RoCE profile at M&M seen deteriorating to ~13% by
FY22E
ICICI Securities | Retail Research 7
ICICI Direct Research
Result Update | Mahindra & Mahindra
Exhibit 10: Valuation matrix (SOTP Valuation)
Automotive Business (UV+PV+CV+Tractors) | crore |/share
Standalone business
FY22E EBITDA 6,985
Assigning EV/EBITDA Multiple of 6x 6.0
Enterprise Value 41,909 337
Net Debt (6,095) -49
Value of Standalone Business (A) 48,004 386
Mahindra Vehicle Manufacturers Ltd
Investment made by M&M (wholly owned subsidiary) 4,065
Assigning 1x P/B on investment value 1.0
Value of MVML attributable to M&M (B) 4,065 34
Total value of automobile business (C= A+B) 420
Value of Investments (listed companies)
M&M
stake
Estimated
value
Contribution
to M&M Remark
(%) | crore | crore |/share
Tech Mahindra 26 80,310 20,929 168 IDirect Target market cap*
M&M Financial Services 51 26,257 13,443 108 IDirect Target market cap*
Mahindra Life space 52 2,062 1,063 9 IDirect Target market cap*
Mahindra CIE 11 8,717 997.2 8 IDirect Target market cap*
Mahindra Holidays & Resorts 67 3,024 2035.2 16 Current market cap*
SsangYong Motors 75 1,740 1,305 10 Current market cap*
Other subsidiaries & investments 9,850 79
Total Value of subsidiaries & associates (D) 49,622.1 400
Value of investments post 35% holding company discount (E = 0.65*D) 260
M&M Target Price (value of equity per share , C+E) 680
Valuation Matrix (SOTP)
Source: ICICI Direct Research
Exhibit 11: Valuation Summary
Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY19 53,614 10.1 38.6 10.1 13.5 9.2 14.1 16.7
FY20E 49,474 (7.7) 38.8 0.7 15.4 9.7 11.3 13.7
FY21E 54,512 10.2 32.7 (15.7) 16.0 9.6 10.0 12.4
FY22E 59,370 8.9 36.5 11.6 14.4 8.5 10.3 12.8
Source: Bloomberg, ICICI Direct Research
ICICI Securities | Retail Research 8
ICICI Direct Research
Result Update | Mahindra & Mahindra
Exhibit 12: Recommendation history vs. consensus
78.0
80.0
82.0
84.0
86.0
88.0
90.0
92.0
0
200
400
600
800
1,000
1,200
1,400
Feb-20
Jan-20
Dec-19
Nov-19
Oct-19
Sep-1
9
Aug-19
Jul-19
Jun-19
May-19
Apr-19
Mar-19
Feb-19
Jan-19
Dec-18
Nov-18
Oct-18
Sep-1
8
Aug-18
Jul-18
Jun-18
May-18
Apr-18
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Nov-17
Oct-17
Sep-1
7
Aug-17
Jul-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
(%)
(|)
Price Idirect target Consensus Target Mean % Consensus with BUY
Source: Bloomberg, ICICI Direct Research
Exhibit 13: Top 10 shareholders
Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 PRUDENTIAL MGMT & SE 30-06-2019 11.38 141.52M 0
2 M & M BENEFIT TRUST 03-06-2019 6.79 84.47M -19.20M
3 FIRST STATE INVESTME 30-06-2019 4.56 56.74M -0.66M
4 MAHINDRA & MAHIN EMP 13-01-2020 4.06 50.46M -0.12M
5 SBI FUNDS MANAGEMENT 31-01-2020 2.61 32.45M +0.53M
6 BLACKROCK 06-02-2020 2.09 26.01M +0.07M
7 VANGUARD GROUP 31-12-2019 1.71 21.31M -0.22M
8 ICICI PRUDENTIAL ASS 31-12-2019 1.60 19.92M +0.07M
9 REPUBLIC OF SINGAPOR 30-06-2019 1.40 17.45M -0.29M
10 FRANKLIN RESOURCES 07-02-2020 1.20 14.87M +0.10M
Source: Bloomberg, ICICI Direct Research
Exhibit 14: Shareholding pattern
(in %) Dec-18 Mar-19 Jun-19 Sep-19 Dec-19
Promoter 21.6 21.5 19.9 19.8 19.9
FII 33.0 31.3 34.5 34.2 34.0
DII 21.9 23.4 24.1 27.8 24.2
Others 23.6 23.8 21.6 18.1 22.0
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 9
ICICI Direct Research
Result Update | Mahindra & Mahindra
Financial Summary
Exhibit 15: Profit and loss statement | crore
(Year-end March) FY19 FY20E FY21E FY22E
Total operating Income 53,614.0 49,473.6 54,511.6 59,370.1
Growth (%) 10.1 -7.7 10.2 8.9
Raw Material Expenses 38,256.5 34,875.0 39,598.1 43,127.4
Employee Expenses 2,980.2 2,984.4 3,050.5 3,172.5
Other Expenses 5,737.7 5,311.8 5,587.4 6,085.4
Total Operating Expenditure 46,974.4 43,171.1 48,236.0 52,385.3
EBITDA 6,639.6 6,302.5 6,275.6 6,984.8
Growth (%) 6.7 -5.1 -0.4 11.3
Depreciation 1,860.4 2,201.6 2,453.0 2,671.7
Interest 113.4 108.9 97.5 83.1
Other Income 1,689.0 1,637.6 1,715.7 1,842.2
PBT 6,354.8 5,629.6 5,440.9 6,072.3
Others (incl exceptional item) 29.7 -766.5 0.0 0.0
Total Tax 1,529.0 1,566.7 1,371.1 1,530.2
PAT 4,796.1 4,829.3 4,069.8 4,542.1
Adjusted PAT 4,818.6 4,250.6 4,069.8 4,542.1
Growth (%) 10.1 0.7 -15.7 11.6
EPS (|) 38.6 38.8 32.7 36.5
Source: Company, ICICI Direct Research
Exhibit 16: Cash flow statement | crore
(Year-end March) FY19 FY20E FY21E FY22E
Profit after Tax 4,796.1 4,829.3 4,069.8 4,542.1
Add: Depreciation 1,860.4 2,201.6 2,453.0 2,671.7
(Inc)/dec in Current Assets -1,803.9 1,033.0 -992.6 -957.3
Inc/(dec) in CL and Provisions 1,230.8 -1,701.3 1,165.8 1,125.2
CF from operating activities 6,083.4 6,362.6 6,696.0 7,381.6
(Inc)/dec in Investments -1,341.3 -2,700.0 -2,100.0 -2,100.0
(Inc)/dec in Fixed Assets -3,373.7 -3,000.0 -3,000.0 -3,000.0
Others 734.7 21.8 -26.6 -25.6
CF from investing activities (3,980.4) (5,678.2) (5,126.6) (5,125.6)
Issue/(Buy back) of Equity -195.9 0.0 0.0 0.0
Inc/(dec) in loan funds -384.1 -300.0 -300.0 -300.0
Dividend paid & dividend tax -1,268.1 -1,268.1 -1,056.7 -1,243.2
Others 582.9 0.0 0.0 0.0
CF from financing activities (1,265.2) (1,568.1) (1,356.7) (1,543.2)
Net Cash flow 837.8 -883.7 212.7 712.8
Opening Cash 2,893.7 3,731.5 2,847.9 3,060.6
Closing Cash 3,731.5 2,847.9 3,060.6 3,773.4
Source: Company, ICICI Direct Research
Exhibit 17: Balance Sheet | crore
(Year-end March) FY19 FY20E FY21E FY22E
Liabilities
Equity Capital 595.8 595.8 595.8 595.8
Reserve and Surplus 33,613.4 37,174.6 40,187.7 43,486.6
Total Shareholders funds 34,209.2 37,770.4 40,783.5 44,082.4
Total Debt 2,480.3 2,180.3 1,880.3 1,580.3
Deferred Tax Liability 634.1 634.1 634.1 634.1
Others 1,487.9 1,372.9 1,512.8 1,647.6
Total Liabilities 38,811.5 41,957.9 44,810.7 47,944.4
Assets
Gross Block 21,974.6 25,394.4 28,394.4 31,394.4
Less: Acc Depreciation 11,892.9 14,094.5 16,547.5 19,219.1
Net Block 10,081.7 11,300.0 11,846.9 12,175.3
Capital WIP 2,419.8 2,000.0 2,000.0 2,000.0
Total Fixed Assets 12,501.5 13,300.0 13,846.9 14,175.3
Other investments 19,032.1 21,032.1 23,032.1 25,032.1
Liquid Investments 3,002.4 3,702.4 3,802.4 3,902.4
Inventory 3,839.3 3,659.7 4,032.4 4,391.8
Debtors 3,946.3 4,066.3 4,480.4 4,879.7
Loans and Advances 673.4 374.0 412.1 448.8
Other current assets 2,321.8 1,647.8 1,815.6 1,977.4
Cash 3,731.5 2,847.9 3,060.6 3,773.4
Total Current Assets 15,068.6 13,151.9 14,357.3 16,027.4
Creditors 9,678.2 8,403.7 9,259.5 10,084.8
Provisions 688.7 682.0 751.5 818.5
Total Current Liabilities 10,366.9 9,085.8 10,011.0 10,903.3
Net Current Assets 4,701.8 4,066.2 4,346.3 5,124.1
Application of Funds 38,811.5 41,957.9 44,810.7 47,944.4
Source: Company, ICICI Direct Research
Exhibit 18: Key ratios
(Year-end March) FY19 FY20E FY21E FY22E
Per share data (|)
EPS 38.6 38.8 32.7 36.5
Cash EPS 53.5 56.6 52.5 58.0
BV 275.2 303.8 328.1 354.6
DPS 8.5 8.5 8.5 10.0
Cash Per Share 30.0 22.9 24.6 30.4
Operating Ratios (%)
EBITDA Margin 12.4 12.7 11.5 11.8
PBT / Net sales 8.9 8.3 7.0 7.3
PAT Margin 8.9 9.8 7.5 7.7
Inventory days 26.1 27.0 27.0 27.0
Debtor days 26.9 30.0 30.0 30.0
Creditor days 65.9 62.0 62.0 62.0
Return Ratios (%)
RoE 14.1 11.3 10.0 10.3
RoCE 16.7 13.7 12.4 12.8
RoIC 17.7 13.3 11.5 12.2
Valuation Ratios (x)
P/E 13.6 13.5 16.0 14.4
EV / EBITDA 9.2 9.7 9.6 8.5
EV / Net Sales 1.1 1.2 1.1 1.0
Market Cap / Sales 1.2 1.3 1.2 1.1
Price to Book Value 1.9 1.7 1.6 1.5
Solvency Ratios
Debt/Equity 0.1 0.1 0.0 0.0
Current Ratio 0.8 0.9 0.9 0.9
Quick Ratio 0.5 0.5 0.5 0.5
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 10
ICICI Direct Research
Result Update | Mahindra & Mahindra
Exhibit 19: ICICI Direct coverage universe (Auto & Auto Ancillary)
Sector / Company CMP M Cap
(|) TP(|) Rating (| Cr) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E
Apollo Tyre (APOTYR) 170 165 Hold 9725 11.9 8.0 10.2 14.3 21.3 16.7 8.1 8.1 6.6 8.0 4.7 6.4 8.3 4.4 5.5
Ashok Leyland (ASHLEY) 81 75 Hold 23778 6.8 3.9 4.1 12.0 20.5 20.0 7.1 10.9 10.2 26.9 14.5 14.2 24.3 13.9 13.1
Bajaj Auto (BAAUTO) 3163 3300 Hold 91528 161.6 171.3 175.0 19.5 18.4 18.0 14.9 13.8 12.8 21.0 19.7 24.4 19.9 20.3 18.7
Bharat Forge (BHAFOR) 485 465 Hold 22580 22.2 17.9 17.4 21.9 27.2 27.9 12.7 16.3 15.8 17.9 12.8 12.7 19.1 14.0 13.3
Eicher Motors (EICMOT) 20420 19750 Hold 55665 808.1 756.0 798.2 25.3 27.0 25.6 18.1 21.6 19.3 32.5 23.4 22.2 24.8 19.6 17.7
Escorts (ESCORT) 855 810 Hold 10481 39.6 39.5 43.3 21.6 21.7 19.8 12.6 12.8 11.5 21.7 18.1 17.4 15.6 14.2 13.4
Exide Industries (EXIIND) 185 220 Buy 15725 9.9 9.6 10.3 18.6 19.3 17.9 10.9 10.8 9.9 18.4 16.3 16.2 12.9 12.8 12.3
Hero Moto (HERHON) 2425 2800 Buy 48427 169.5 191.4 176.7 14.3 12.7 13.7 8.9 9.8 8.8 37.1 29.1 28.8 26.3 23.7 22.3
M&M (MAHMAH) 525 680 Buy 65268 38.6 38.8 32.7 13.6 13.5 16.1 9.2 9.7 9.6 16.7 13.7 12.4 14.1 11.3 10.0
Maruti Suzuki (MARUTI) 7038 5850 Sell 212604 248.3 201.4 227.7 28.3 34.9 30.9 16.0 21.8 19.0 16.3 8.7 9.7 16.3 12.3 12.9
Tata Motors (TATMOT) 184 200 Hold 65790 -84.6 4.0 21.3 -2.2 45.9 8.6 4.4 4.1 3.2 5.4 8.1 12.0 7.1 6.1 14.7
RoE (%)EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)
Source: Bloomberg, ICICI Direct Research
ICICI Securities | Retail Research 11
ICICI Direct Research
Result Update | Mahindra & Mahindra
RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ICICI Securities | Retail Research 12
ICICI Direct Research
Result Update | Mahindra & Mahindra
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