Mahindra and Mahindra - Q1FY2014 Result Preview - Angel Broking

Mahindra and Mahindra (MM) will be announcing its 1QFY2014 results today. We expect the company's top-line to register a strong growth of ~13% yoy (flat qoq) to Rs. 10,563cr driven by ~6% yoy growth in volumes and ~3% yoy growth in net average realization. The volume growth was driven by better-than-expected growth of 25.2% yoy (50.2% qoq) in tractor sales even though the automotive segment registered a decline of 2.4% yoy (17.6% qoq). The momentum in the automotive segment has slowed down considerably in 1QFY2014 due to weak consumer demand and also due to increasing competition in the utility vehicle segment. On the operating front, we expect EBITDA margins to expand ~70bp yoy (~40bp qoq) to 12.5% driven by easing of commodity prices and also on account of better product-mix (higher share of tractors in product-mix) and price hikes undertaken in 4QFY2013. Consequently, bottom-line is expected to increase 17.1% yoy (6.4% qoq) to Rs. 850cr. At Rs. 860, the stock is trading at 12.1x FY2015E earnings. Currently, we have a Buy rating on the stock with an SOTP based target price of Rs. 1,103.

Source : Equity Bulls

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