{"id":1334,"date":"2019-11-12T04:35:28","date_gmt":"2019-11-12T04:35:28","guid":{"rendered":"https:\/\/jobbinghood.com\/finance\/2019\/11\/12\/stock-corner-maintain-buy-on-mm-with-target-price-of-rs-676\/"},"modified":"2019-11-12T04:35:28","modified_gmt":"2019-11-12T04:35:28","slug":"stock-corner-maintain-buy-on-mm-with-target-price-of-rs-676","status":"publish","type":"post","link":"https:\/\/jobbinghood.com\/magazine\/2019\/11\/12\/stock-corner-maintain-buy-on-mm-with-target-price-of-rs-676\/","title":{"rendered":"Stock corner: Maintain &#8216;buy&#8217; on M&#038;M with target price of Rs 676"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"article-image\">\n<figure><img fetchpriority=\"high\" decoding=\"async\" class=\"lazy lazy-hidden size-full wp-image-1761687\" src=\"http:\/\/www.financialexpress.com\/wp-content\/plugins\/a3-lazy-load\/assets\/images\/lazy_placeholder.gif\" data-lazy-type=\"image\" data-src=\"https:\/\/images.financialexpress.com\/2019\/11\/1-323.jpg\" alt=\"\" width=\"660\" height=\"440\" srcset=\"\" data-srcset=\"https:\/\/images.financialexpress.com\/2019\/11\/1-323.jpg 660w, https:\/\/images.financialexpress.com\/2019\/11\/1-323-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/11\/1-323-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/11\/1-323-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><noscript><img decoding=\"async\" class=\"size-full wp-image-1761687\" src=\"https:\/\/images.financialexpress.com\/2019\/11\/1-323.jpg\" alt=\"\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2019\/11\/1-323.jpg 660w, https:\/\/images.financialexpress.com\/2019\/11\/1-323-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/11\/1-323-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/11\/1-323-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><\/noscript><span class=\"article-caption\">M&amp;M continues to surprise on profitability<\/span><\/figure>\n<\/div>\n<p><a target=\"_blank\" href=\"http:\/\/www.financialexpress.com\/auto\/new-cars\/mahindra\/\" rel=\"noopener noreferrer\">Mahindra<\/a> &amp; Mahindra\u2019s (M&amp;M) Q2FY20 Ebitda at Rs. 1,540 crore (down 16.7%) came 7% ahead of consensus driven by better product mix, price increase and tight leash on cost. Key positive surprises were: 23% jump in PV festive retail sales \u2014 higher than industry; sustained market share gain in PV \u2014 up 60 bps q-o-q to 7.8%; inventory under control; and benign outlook on tractors &amp; UVs. However, key negative surprises were: Significant jump in losses of subsidiary; and uncertainty on diesel portfolio\u2019s orderly BS VI transition.<\/p>\n<p>Though we are enthused by the sharpened margin focus, reduction in losses of subsidiary remains key monitorable. Hence, we remove the company from our BRAVEHEART series. Maintain \u2018buy\u2019 with March 2021E SOTP-based TP of Rs. 676.<\/p>\n<p>M&amp;M continues to surprise on profitability. While price hike and better product mix benefitted revenue, commodity cost benefit led to positive gross margin surprise. Tight leash on cost (evident from y-o-y decline in fixed cost) led to a 7% Ebitda beat. Effective customer-acquisition cost led to lower-than-expected incentive during festive sales (up Rs. 1,000-1,500\/vehicle y-o-y). By segment, despite an 8% y-o-y dip in volumes, the FES segment posted 19.3% (down only 90 bps y-o-y) Ebit margin driven by strong focus on cost control. However, the Ebit margin in the automotive business slid about 210 bps y-o-y to 5.8% due to higher depreciation and volume 21% decline.<\/p>\n<p>M&amp;M is currently battling various headwinds: a) near-term uncertain demand outlook; and 2) perception challenge on its ability to ensure a smooth transition to BS VI. Given its state of preparedness, we expect the BS VI transition to be smooth. However, demand concerns persist.<\/p>\n<p>At the current stock level, we believe the street is overly pessimistic about M&amp;M\u2019s ability to smoothly transition to BS VI. We maintain \u2018buy\/SO\u2019. The stock is trading at FY20\/21E PER of 15.2x\/16.4x.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from BSE and NSE and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"http:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\" https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\" https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>[ad_2]<br \/><\/p>\n<div class=\"jobbi-after-content-jh-placement jobbi-entity-placement\" id=\"jobbi-4010664919\"><div id=\"jobbi-3961409721\"><script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-5862940809620110\" crossorigin=\"anonymous\"><\/script><ins class=\"adsbygoogle\" style=\"display:block;\" data-ad-client=\"ca-pub-5862940809620110\" \ndata-ad-slot=\"\" \ndata-ad-format=\"auto\"><\/ins>\n<script> \n(adsbygoogle = window.adsbygoogle || []).push({}); \n<\/script>\n<\/div><\/div>","protected":false},"excerpt":{"rendered":"<p>[ad_1] M&amp;M continues to surprise on profitability Mahindra &amp; Mahindra\u2019s (M&amp;M) Q2FY20 Ebitda at Rs. 1,540 crore (down 16.7%) came 7% ahead of consensus driven by better product mix, price increase and tight leash on cost. Key positive surprises were: 23% jump in PV festive retail sales \u2014 higher than industry; sustained market share gain [&hellip;]<\/p>\n","protected":false},"author":348,"featured_media":1335,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1334","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"_links":{"self":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1334","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/users\/348"}],"replies":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/comments?post=1334"}],"version-history":[{"count":0,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1334\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media\/1335"}],"wp:attachment":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media?parent=1334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/categories?post=1334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/tags?post=1334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}