Published on 12/10/2017 2:58:19 PM | Source: Motilal Oswal Securities Ltd
Buy Mahindra And Mahindra For Target Rs.1,634.00 - Motilal Oswal
Vols up 29% YoY at 99.2k units, exceeding est. of 79.3k
Growth at ~49% YoY in Tractor and ~18% YoY in UV
* Sep-17 volumes rose 29% YoY to 99,226 units (est. of 79,270 units), led by ~49% YoY growth in the tractor segment and 18% YoY growth in the UV segment. We estimate 20.3% volume growth for FY18, implying a residual monthly run-rate of 71.9k units.
* Tractor sales came in at 45,563 units, significantly above estimate of 32k units, registering ~49% YoY growth (+176% MoM), helped by domestic tractor sales growth of 52% YoY to 44,000 units; exports grew only 2% YoY to 1,563 units.
* UV (incl. pick-ups) sales increased ~18% YoY to 46,337 units (est. of 42k units).
* Momentum in pick-ups continued with 17% YoY growth, while passenger utility vehicles also recovered with strong growth of 26% YoY.
* LCV (>3.5t) and M&HCV sales increased 18% and 143% YoY, respectively. MHCV sales continued to be robust. n 3W volumes (flat YoY) recovered gradually, with growth of 52% MoM to 5,928 units (est. of 4,250 units).
* Speaking on the monthly performance, Rajan Wadhera, Automotive Division, M&M. said, “The auto industry has witnessed buoyant demand in September leading up to the festive season. This upsurge has been witnessed in both urban and rural markets. At Mahindra, we are very happy with our September 2017 performance with our passenger & commercial vehicle sales having grown at 23% & 19% respectively. We are particularly happy with the performance of our Scorpio brand which has had its highest monthly sales in September since inception. Going forward, we are confident of sustaining growth momentum for the rest of the festive season”.
* Rajesh Jejurikar, President - Farm Equipment Sector, Mahindra & Mahindra Ltd. said, “We have sold 44,000 tractors in the domestic market during September 2017, growth of 52% over last year. With good monsoon and improved Kharif production estimates, we expect positive sentiment to continue through the festive season. In the exports market, we sold 1,563 tractors’’.
* The stock trades at 19.7x/16.3x FY18E/19E consolidated EPS of ~INR64/78. Maintain Buy.
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