Sharekhan has come out with its report on Mahindra and Mahindra (M&M) and has recommended buy rating on the stock with a target of Rs 865 in its September 29, 2011 research report......
Sharekhan has come out with its report on Mahindra and Mahindra (M&M) and has recommended buy rating on the stock with a target of Rs 865 in its September 29, 2011 research report.
“Mahindra and Mahindra (M&M)’s XUV 5OO, perceived to be an entry segment luxury sports utility vehicle (SUV), has surprised with its disruptive pricing. The basic two-wheel drive model starts from Rs10.8 lakh and extends to Rs11.95 lakh ex showroom Delhi. The four-wheel drive starts from Rs12.88 lakh. The pricing has surprised us as we were expecting the new SUV to be priced higher than the top-end Scorpio at Rs13 lakh plus.”
“The management has indicated that the value-added tax (VAT) refund issue shall be resolved by the Maharashtra state government in Q2FY2012. Under a major policy overhaul, the government has decided to stop the VAT incentives for sales outside Maharashtra. This is a negative step as it would affect the future investments in Maharashtra. However, the industry is hopeful of a partial roll-back. Another major policy roadblock for diesel cars emerged after the finance minister indicated that the diesel used in diesel passenger cars and UVs may not be subsidised. Given the under-recoveries of Rs6-8 per litre on the diesel front, the de-control mechanism would reduce the price differential between petrol and diesel. It would also increase the pay-back time for diesel cars. However, given the superior mileage of the diesel variants and the lower price of diesel vis-à-vis petrol, even after the deregulation the demand for diesel cars is expected to remain healthy.”
“In our previous note, “Price target revised to Rs814”, dated September 2, 2011 we had upgraded our volume growth assumptions for M&M. Our FY2012 and FY2013 earnings per share (EPS) estimates are Rs46.8 and Rs54.8 respectively. We are again upgrading our sum-of-the-parts (SOTP) price target to Rs865 per share as we expect the stock to get re-rated considering the company’s promising product line and the sustainable demand for most of its products. Our revised price target is based on a higher price/earnings multiple (from 12x to 13x on FY2013E EPS) to the core business. We maintain our Buy recommendation on the stock,” says Sharekhan research report.
Sharekhan has come out with its report on Mahindra and Mahindra (M&M) and has recommended buy rating on the stock with a target of Rs 865 in its September 29, 2011 research report.
“Mahindra and Mahindra (M&M)’s XUV 5OO, perceived to be an entry segment luxury sports utility vehicle (SUV), has surprised with its disruptive pricing. The basic two-wheel drive model starts from Rs10.8 lakh and extends to Rs11.95 lakh ex showroom Delhi. The four-wheel drive starts from Rs12.88 lakh. The pricing has surprised us as we were expecting the new SUV to be priced higher than the top-end Scorpio at Rs13 lakh plus.”
“The management has indicated that the value-added tax (VAT) refund issue shall be resolved by the Maharashtra state government in Q2FY2012. Under a major policy overhaul, the government has decided to stop the VAT incentives for sales outside Maharashtra. This is a negative step as it would affect the future investments in Maharashtra. However, the industry is hopeful of a partial roll-back. Another major policy roadblock for diesel cars emerged after the finance minister indicated that the diesel used in diesel passenger cars and UVs may not be subsidised. Given the under-recoveries of Rs6-8 per litre on the diesel front, the de-control mechanism would reduce the price differential between petrol and diesel. It would also increase the pay-back time for diesel cars. However, given the superior mileage of the diesel variants and the lower price of diesel vis-à-vis petrol, even after the deregulation the demand for diesel cars is expected to remain healthy.”
“In our previous note, “Price target revised to Rs814”, dated September 2, 2011 we had upgraded our volume growth assumptions for M&M. Our FY2012 and FY2013 earnings per share (EPS) estimates are Rs46.8 and Rs54.8 respectively. We are again upgrading our sum-of-the-parts (SOTP) price target to Rs865 per share as we expect the stock to get re-rated considering the company’s promising product line and the sustainable demand for most of its products. Our revised price target is based on a higher price/earnings multiple (from 12x to 13x on FY2013E EPS) to the core business. We maintain our Buy recommendation on the stock,” says Sharekhan research report.
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