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Buy Mahindra and Mahindra – Citigroup

July 2, 2007

Strong UV sales (+34% YoY), offset weak growth within the tractor segment. UV sales across product segments were strong, with both Scorpio and non-Scorpio volumes up 32% and 35% respectively. Export initiatives within the auto sector continue – growth was strong at +89% YoY, albeit off a modest base.

The initial response to the Logan has been fairly positive – especially given that the Logan was launched in only 11 cities. Management plans to expand capacity from 90 vehicles/day to 180 vehicles / day over the next two months.

Citi maintains a BUY on Mahindra and Mahindra with a price target of Rs 1032 which is based on sum of parts valuation. M&M’s core business at Rs 543 / share. M&M’s listed subsidiaries (Rs402 / share), Auto component business (Rs57 /share) and M&M’s investments in other subsidiaries (including Mahindra Holidays at Rs30 /share).

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