Mahindra CIE Automotive - Company Update - ICICI Securities

Mahindra CIE (MCI) reported weak Q2CY20 results, with India performance a bigger dragger than Europe. Consolidated sales were down 66% YoY to Rs. 736 crore, with India revenues down 71%, Europe revenues down 58%. Consolidated, standalone EBITDA was in the red amid broad-based spike in all cost heads. India, Europe EBIT margins were at -23.1%, -14.5% respectively. Standalone loss at the PAT level was at Rs. 47 crore, with consolidated loss at Rs. 129 crore.

Valuation & Outlook

We expect sales, PAT to grow at a CAGR of -4.2%, 3%, respectively, in CY19-21E. While demand challenges remain, margin supportive efforts are encouraging. Valuing MCI at Rs. 115 (i.e. 6.25x CY21E EV/EBITDA), we downgrade the stock to HOLD after a sharp run up in the stock over the past couple of months. MCI's track record of consistent CFO generation combined with strong MNC parentage remains a comforting factor.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_MahindraCIE_CoUpdate_Jul20.pdf

Shares of Mahindra CIE Automotive Limited was last trading in BSE at Rs.109.8 as compared to the previous close of Rs. 109.9. The total number of shares traded during the day was 12830 in over 537 trades.

The stock hit an intraday high of Rs. 113 and intraday low of 109. The net turnover during the day was Rs. 1412132.

Source : Equity Bulls

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