Kotak Institutional Equities retains add on Mahindra CIE Automotive, revised fair value to Rs 170

Kotak Institutional Equities has retained add rating on Mahindra CIE Automotive in the long term and revised fair value to Rs 170 from Rs 190. Shares of Mahindra CIE ended up 0.50% at Rs 156.50 on Sundat at Mahurat trading while the BSE Sensex closed 192.14 points up at 39,250.20.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 1868.50 crore, down 12.77% from last quarter sales of Rs 2141.99 crore and down 5.68 % from last year same quarter sales of Rs 1981.09 crore. The company has reported net profit after tax of Rs 61.18 crore in the latest quarter.


Investment Rationale

Mahindra CIE's operating profit before tax in the third quarter was 28% below estimates led by weakness in European and Indian operations, said Kotak Institutional. The brokerage has decreased its consolidated EBITDA estimates for CY19-21 by 3-5% due to (1) 3-9% cut in revenues assumptions of European and Indian businesses and (2) cut in operating profit margin assumptions of European business by 60 bps.