Buy Mahindra & Mahindra, target price Rs 625: Kotak Institutional Equities

Kotak Institutional Equities has maintained buy rating on Mahindra & Mahindra and cut target price to Rs 625 from Rs 815. The stock ended up 1.8 per cent at Rs 363.20 on Friday while BSE Sensex closed 986.11 points up (+3.22 per cent) at 31,588.72.

Mahindra & Mahindra Ltd., incorporated in 1945, has a market cap of Rs 45152.75 crore.

Investment Rationale


The brokerage expects the near term to remain challenging for the company given Covid-19-led uncertainties. However, the brokerage expects tractor demand to recover once the situation stabilises on record rabi corp output. The core business is trading at 4.7 times FY22 estimated EPS which is very cheap, said Kotak Institutional.

Financials

Mahindra & Mahindra's key products/revenue segments include Automobile-Light; Medium & Heavy Commercial; Jeep; Passenger Car which contributed Rs 52222.45 crore to sales value (97.40 per cent of total sales); Sale of services which contributed Rs 738.35 crore to sales value (1.37 per cent of total sales); Other Operating Revenue which contributed Rs 528.45 crore to sales value (0.98 per cent of total sales); Scrap which contributed Rs 124.75 crore to sales value (0.23 per cent of total sales)for the year ending March 31, 2019.

For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 25019.86 crore, up 4.53 per cent from last quarter sales of Rs 23935.93 crore and down -4.03 per cent from last year same quarter sales of Rs 26069.38 crore. The company reported net profit after tax of Rs -170.43 crore in the latest quarter.