CLSA upgrades M&M to buy, raises target price

CLSA has upgraded Mahindra & Mahindra to buy from outperform citing improving volume and earnings growth as well as attractive valuation. The brokerage has raised target price on M&M to Rs 1610 from Rs 1585.

CLSA has upgraded Mahindra & Mahindra to buy from outperform citing improving volume and earnings growth as well as attractive valuation.

The brokerage said M&M's volume growth is on an uptrend led by strong demand in tractors and a cyclical recovery in light commercial vehicles. A pick up in rural economy is likely and this should benefit M&M, said CLSA.

CLSA said M&M trades at a 12 times one-year forward auto PE vs its historical average of 15 times and is at a 35-50 per cent PE discount to Hero MotoCorp and Maruti Suzuki India.

"We raise 18-20CL EPS by 1-2 per cent on higher volumes and upgrade the stock to BUY," said CLSA.
The brokerage said M&M's volume growth is on an uptrend led by strong demand in tractors and a cyclical recovery in light commercial vehicles. A pick up in rural economy is likely and this should benefit M&M, said CLSA.

CLSA said M&M trades at a 12 times one-year forward auto PE vs its historical average of 15 times and is at a 35-50 per cent PE discount to Hero MotoCorp and Maruti Suzuki India.

"We raise 18-20CL EPS by 1-2 per cent on higher volumes and upgrade the stock to BUY," said CLSA.