Maintain Buy on M&M - UV & 3 Wheelers Disappoint - Motilal Oswal

M&M: Volumes at 44,661 units (+27% YoY & -24% MoM); UVs & 3W disappoint; Strong performance in Tractors; Buy

- M&M's volumes grew 27% YoY (24% MoM decline), driven by strong growth in Tractors. MoM volumes decline was due to 6 days maintenance shutdown.

- UV volumes improved 18.6% YoY (24% MoM decline) to 20,646 units, impacted by lower than estimated volumes of small trucks, Gio and Maximmo.

- Tractor volumes grew by 43% YoY (26% MoM decline) at 17,993 units (v/s est 17,500). Tractor volumes benefited from easing-off supply constraints.

- 3-wheeler volumes grew 8.5% YoY (~17% MoM decline) to 4,468 units (v/s est 5,500).

- Our estimates factor in 20% volume growth in FY11 (implying residual monthly run rate of 48,917 units). On a consolidated basis, the stock trades at 13.8x FY11E of consolidated EPS of Rs57.9 and 11.6x FY12E of consolidated EPS of Rs68.8. Maintain Buy.

Source : Equity Bulls

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