Stock To Buy: Acquired New Investment Of Rs. 19.25bn, This Auto Stock Can Gain 23%

Emkay Global, a renowned brokerage firm has recommended buying the stocks of Mahindra & Mahindra. MM has announced that British International Investment Plc will invest Rs. 19.25bn by way of CCPS in its E-PV subsidiary (EVCo) for a post-conversion equity stake of 2.75-4.76% in FY28.

Auto Stock To Buy: Target Price, Current Market Price

The Current Market Price (CMP) of Mahindra & Mahindra is Rs. 1,134. Emkay Global has estimated a Target Price for the stock at Rs. 1,390. This stock has the potential to give a 23% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 144,838 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 1,134
Target Price	Rs. 1,390
Potential 1 year return	23.00%
52 week high share price	Rs. 1,194.90
52 week low share price	Rs. 671.15

The company's revenue in FY22 was recorded at Rs. 574,460 mn, which is expected to be at Rs. 756,082 mn in FY23. Their EBITDA in FY22 stood at Rs. 70,423 mn, which is expected to be at Rs. 93,615 mn in FY23. The company's adj. PAT in FY22 was recorded at Rs. 37,809 mn, which is expected to be at Rs. 52,792 mn in FY23.

Stock advantages: Emkay Global

As the stock's advantage, Emkay Global thinks, "Investments by British International Investment (BII) and Mahindra & Mahindra in the EVCo will be utilized to create an E-UV portfolio. Four products are expected to be launched on new dedicated platforms over FY25-27, while one product (XUV 400) will be launched on the existing platform in Sep'22. The eventual stake will depend on the EVCo's revenue achievements by FY27. The aspirational sales target is 200,000 units, representing a 30% EV share by FY27. We remain positive on MM due to the sales upcycle across segments and a large order book in PVs (~170,000 units). We raise FY23-24E EPS estimates by 5% based on a 3% increase in our volume assumptions. Following the revision, our FY22-24E revenue/earnings CAGRs stand at 22%/24%."

Company profile:

Mahindra & Mahindra's recent UV launches have been highly successful and have led to a large pending order book - XUV700 (80,000 bookings), Thar (26,000), XUV300 (14,000) and Bolero (15,000). Management hopes to repeat the same in the upcoming E-PVs as well. The new subsidiary (EVCo) will carry out the E-PV business and related assets will be transferred to it. MM's total investment in this business as of Mar'22 stands at Rs. 4bn. SCORPIO-N, XUV700, THAR are the company's most popular SUVs.

Disclaimer

The above stock was picked from the brokerage report of Emkay Global. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.