Jefferies has buy on M&M, target price Rs 690

Jefferies has a buy rating for Mahindra & Mahindra in the long term, with a target price of Rs 690. Shares of Mahindra & Mahindra ended up 1.09% at Rs 562.65 on Thursday while the BSE sensex closed 198.54 points down at 38,106.87.

Company Financials

For the quarter ended 30-06-2019, the company has reported consolidated sales of Rs 26041.02 crore, down -4.12% from last quarter sales of Rs 27158.77 crore and down -.08% from last year same quarter sales of Rs 26061.51 crore. The company has reported net profit after tax of Rs 607.08 Crore in latest quarter.


Investment Rationale

M&M's recent acquisition of a 51% stake in most of Ford's India operations at an enterprise value of $138 million and equity value of $93 million has potential for cost savings, said Jefferies. However, Jefferies does not see much merit to the acquisition of additional manufacturing capacity and Ford's weak domestic franchise especially given investor concerns around M&M's capital allocation.