Buy This Multibagger Auto Major As Performance Set To Strengthen: Bob Capital

1. Mahindra & Mahindra Ltd Stock Performance

The current market price of the large cap stock is Rs 1264 apiece with an intraday decline of 2.21%. The stock's 52-week high is quoted at Rs 1366 apiece and 52-week low is quoted at Rs 671 apiece.

2. Mahindra & Mahindra Ltd Return

The stock has given multibagger returns to investors. In the last 5-years, the stock has given 79% return and in last 3-years, the return remains at 136%. The stock has jumped 48% in last 1-year and 20% in last 6-months. It has fallen 4% in last 3-months.

3. Steady Performance; Set To Strengthen

MM's Q2FY23 net sales stood at Rs 208.4bn (+6% QoQ, +57% YoY) as net blended realisation per vehicle (NRPV) rose to Rs 763k (+6% QoQ, +9% YoY). Blended volumes (automotive plus farm equipment) were flat sequentially. Flat raw material cost-to-sales kept gross margin intact QoQ at 23.5% while EBITDA margin was muted at 12% (flat QoQ). EBITDA grew just 7% QoQ (50% YoY) to Rs 25bn, whereas reported PAT increased 60% QoQ (and 39% YoY) to Rs 23.4bn on higher other income due to dividend inflows normally received in Q2.

4. Mahindra & Mahindra Ltd Valuation

According to the analyst, "We estimate a 21% revenue CAGR for MM over FY22-FY25. Margin headwinds are likely to recede with better raw material availability, moderating costs, price hikes and optimal utilisation. Our EBITDA/PAT CAGR estimates thus stand at 26%/24% over FY22-FY25, with EBITDA margin assumptions of 13-14% in FY24/FY25. We assume coverage with BUY for an SOTP-based TP of Rs 1,496, valuing the core business at 18x FY24E EPS (at par with its long-term average) and assigning a 30% holding company discount to subsidiaries (Rs 282/sh). New launches in the high-end segment and in EVs as well as export revival represent key rerating triggers."

5. About Mahindra & Mahindra

Mahindra & Mahindra is a core unit of conglomerate Mahindra Group. A leading producer of sport utility vehicles, trucks and farm tractors, the company is active in the domestic and international markets.

It came into existence in 1945 as a steel trading company. It was established by Jagdish Chandra Mahindra, his brother Kailash Chandra Mahindra, partner Ghulam Mohammed and the city now known as Mumbai. J.C. Mahindra was the grandfather of Anand Mahindra, the current chairman.

Disclaimer

The stock has been picked from the brokerage report of Bob Capital. Greynium Information Technologies, 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 check with certified experts before taking any investment decision.