Mahindra and Mahindra - Tractors: Core demand intact - AXIS Securities

We met the management of M&M. Key takeaways: (1) Tractor volume for industry declined by only 2% in FY13 - despite slump in infrastructure activities (50% share) and subdued agri environment - as labor shortage ensured higher demand from farmers, (2) accelerated recovery in tractors is possible if infra recovers, (3) recent slowdown in XUV5OO is due to rise in excise duty; expects steady state domestic run rate of ~4,000 units/month and (4) Only variants/ upgrades planned in FY14; new product launches in FY15.

Downgrade our rating to HOLD with SOTP-based TP of Rs 943. Downside risks arise from lower than estimated volumes for XUV 5OO and Quanto due to increasing competition in UVs. Favorable metal price movement is the key upside risk.

Source : Equity Bulls

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