Auto Ancillary Mid Cap Stock Has Given 114.53% In 1-Year, Should You Buy?

Mahindra CIE Automotive Limited, a mid cap auto ancillary company's share price has risen exponentially by 114.53% in over a year. One of the leading financial securities firm, ICICI direct feels that the stock price of this mid cap company will rise further at target price of Rs 500 per share.

Mahindra CIE Automotive Limited, a mid cap is a subsidiary company of the CIE Automotive group of Spain which specialises in supplying components and sub assemblies for the automotive market. The Indian arm is a multi-technology automotive components supplier. The current market cap of the Mahindra CIE Automotive Limited is Rs 15,847.88 crore and its stock price is trading 6.88% down on intraday basis to Rs 417.80 per share.

As per the ICICI direct coverage report, for the calendar year 2022, the company's consolidated revenue mix was Europe 36% and India 64%. Company posted healthy Q4CY22 results, the consolidated revenue from continuing operations was Rs 2,426 crore, was flat sequentially on quarterly basis. Its profit after tax was Rs 658 crores versus profit reading on QoQ and YoY basis. Profit from continuing operation stood at Rs 195 crore for Q3FY22 and Rs 711 crore for CY22.

The analsyst of ICICI direct outlined the key points that are beneficial for future price performance. "With healthy underlying demand across major clients (like M&M, Tata, Maruti Suzuki) in Indian operations and PV centric Europe exposure, sales at MCI are expected to grow at 12.4% CAGR over CY22-24E. Robust order wins during year amidst consistent efforts to de-risk the base business with EV orders crossing Rs 3 billion (per annum basis) mark in India RoE/RoCE is seen improving to 15%/17% respectively by CY24E amid superlative CFO/FCF yields which are pegged at ~7%/5% over CY22-24E."

In terms of valuation, the securities firm explains, "Mahindra CIE Automotive Limited's stock price has grown ~11% CAGR past 5 years (from ~Rs 230 levels in Feb 2018), outperforming the Nifty Auto index in that time. We retain BUY, tracking healthy demand outlook, value accretion post selling of its German forging operations; improved financials; order wins in EV space, strong CFO yields (~7%) & healthy double digit return ratios.

Disclaimer:
The stocks have been picked from the brokerage report of ICICI Direct. Greynium Information Technologies and the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.