Antiques puts 'buy' on Mahindra & Mahindra
Antique Finance has recommended a ‘buy’ on Mahindra & Mahindra with a target price of Rs. 375 from its current market price of Rs.314.
By ET Bureau |
MUMBAI: Antique Finance has recommended a ���buy��� on Mahindra & Mahindra with a target price of Rs. 375 from its current market price of Rs.314.
M&M's stake in group companies such as Tech Mahindra, Mahindra Forgings, M&M Financial services and Mahindra Holidays & Resorts, among others, significantly augments its consolidated revenues and profits. The value accruing from these investments provides a huge cushion to M&M's market price, according to a report by Antique research.
Government initiatives on driving the agricultural growth such as a hike in MSPs, increase in allocation towards agriculture credit, and thrust on irrigation have led to an increase in rural incomes. This augurs well for the agricultural sector, which has a direct correlation to demand for tractors.
Said Amish Shah, research analyst, Antique, ���given M&M's undisputed leadership in tractors, we believe that the company is best placed to capitalise on the opportunity.���
���In line with the industry, we expect FY10 to be comparatively better for M&M's automotive segment, given the reduction in fuel prices, fall in interest rates, decline in raw material costs and cut in excise duties,��� he added.
The positive response received from its recently launched Xylo, will further enable M&M gain market share for the company.
���M&M's significant presence in rural markets, which are relatively insulated from the current slowdown, provides it a competitive advantage,��� said Ashish Nigam, another analyst at Antique.
The report further states that after adjusting for the current value of M&M's key subsidiaries, the company's core business is available at a P/E of 6.8x its FY10e EPS, indicating low multiples.
Antique���s SOTP-based target price of Rs. 375 values the core business at Rs. 255 per share and the subsidiaries at Rs.120 per share. This implies a 20% upside from current levels.
M&M's stake in group companies such as Tech Mahindra, Mahindra Forgings, M&M Financial services and Mahindra Holidays & Resorts, among others, significantly augments its consolidated revenues and profits. The value accruing from these investments provides a huge cushion to M&M's market price, according to a report by Antique research.
Government initiatives on driving the agricultural growth such as a hike in MSPs, increase in allocation towards agriculture credit, and thrust on irrigation have led to an increase in rural incomes. This augurs well for the agricultural sector, which has a direct correlation to demand for tractors.
Said Amish Shah, research analyst, Antique, ���given M&M's undisputed leadership in tractors, we believe that the company is best placed to capitalise on the opportunity.���
���In line with the industry, we expect FY10 to be comparatively better for M&M's automotive segment, given the reduction in fuel prices, fall in interest rates, decline in raw material costs and cut in excise duties,��� he added.
The positive response received from its recently launched Xylo, will further enable M&M gain market share for the company.
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���M&M's significant presence in rural markets, which are relatively insulated from the current slowdown, provides it a competitive advantage,��� said Ashish Nigam, another analyst at Antique.
The report further states that after adjusting for the current value of M&M's key subsidiaries, the company's core business is available at a P/E of 6.8x its FY10e EPS, indicating low multiples.
Antique���s SOTP-based target price of Rs. 375 values the core business at Rs. 255 per share and the subsidiaries at Rs.120 per share. This implies a 20% upside from current levels.
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