Buy M&M - Geojit BNP Paribas

'Buy' Mahindra & Mahindra – TP Rs.800

- Mahindra & Mahindra (M&M) has been rated to 'buy' with a target price of Rs.800 over one year. The stock is being traded at a price range of Rs.686 in recent days.

- M&M has been the fastest growing company in the automobile space in terms of both sales and profitability for the last seven years. (5% and 10% respectively above the sector average)

- A strong product portfolio and exposure to fast growing semi-urban and rural market would help the company to maintain its high growth amongst Indian auto makers.

- Industry checks suggest that slowdown in tractor demand is temporary and it is expected that demand is to pick up by 2QFY13, supported by higher credit outlays and new cropping season.

- Scale and benign raw material inflation would lift automotive margins, which are now below the long term average by 100 bps.

- Current underperformance when compared to peers would change with improvement in tractor business performance and more stable margin performance in the automotive business.

Source : Equity Bulls

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