MM recalls XUV5OO for part replacement - Angel Broking

Mahindra and Mahindra (MM) has announced a voluntary recall of its highly successful utility vehicle, XUV5OO, to carry out preventive replacement of certain parts. According to the company, a select batch of vehicles manufactured during 2011 and 2012 will be recalled for replacing fluid hose, front power window units as well as the left wiper blade cover. The company will undertake the replacement at free of cost and it will be carried out on a priority basis.

While MM has stated that the replacement is being carried out keeping in mind the customer centric approach and in compliance with the recently announced voluntary code on vehicle recall; the company has not stated the number of vehicles that would be impacted because of the recall. This is one of the first recalls made by the company in recent times and we do not see a significant impact of the same on the company's volume performance going ahead.

At Rs. 902, the stock is trading at 14x FY2014 earnings. We maintain our Accumulate rating on the stock with a target price of Rs. 1,019.

Source : Equity Bulls

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