Buy Mahindra CIE Automotive, target price Rs 466: ICICI Securities

ICICI Securities has buy call on Mahindra CIE Automotive with a target price of Rs 466. The current market price of Mahindra CIE Automotive is Rs 349.15.

Mahindra CIE Automotive, incorporated in the year 1999, is a Mid Cap company (having a market cap of Rs 13264.73 Crore) operating in Auto Ancillaries sector.

Mahindra CIE Automotive key Products/Revenue Segments include Automotive Accessories, Other Operating Revenue and Sale of services for the year ending 31-Dec-2021.

Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 2271.23 Crore, down -17.02 % from last quarter Total Income of Rs 2736.95 Crore and up 9.12 % from last year same quarter Total Income of Rs 2081.39 Crore. Company has reported net profit after tax of Rs -658.20 Crore in latest quarter.

The company’s top management includes Mr.Shriprakash Shukla, Mrs.Roxana Meda Inoriza, Mr.Kadambi Narahari, Mr.Suhail A Nathani, Mr.Manoj Maheshwari, Mr.Dhananjay Mungale, Mr.Puneet Renjhen, Mr.Jesus Maria Herrera Barandiaran, Mr.Manoj Menon, Mr.Anil Haridass, Mr.Ander Arenaza Alvare, Mr.Alan Savio D Silva Picardo. Company has Price Waterhouse Chartered Accountants LLP as its auditors. As on 31-12-2022, the company has a total of 38 Crore shares outstanding.

Investment Rationale
The company is looking forward to sustainable EBITDAM of ~17-18% in India and ~16-17% in EU, resulting in consolidated EBITDAM of ~17% ahead. With lower margin truck forging business moving out of operations in EU and power costs rationalising back, EU margin is set to revive towards ~16-17% in CY23, the brokerage believes.

For India, productivity improvement is the key margin driver ahead other than gradual reversal in gross margin, to take EBITDA up from current ~15% to ~17-18% in CY23-25.

Promoter/FII Holdings
Promoters held 74.96 per cent stake in the company as of 31-Dec-2022, while FIIs owned 7.29 per cent, DIIs 7.47 per cent.