Buy Mahindra & Mahindra, target price Rs 1186: Centrum Broking

Mahindra & Mahindra Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 128589.62 Crore) operating in Auto sector.

Mahindra & Mahindra Ltd. key Products/Revenue Segments include Automobile-Light, Medium & Heavy Commercial, Jeep, Passenger Car, Sale of services, Other Operating Revenue for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 26215.47 Crore, up 10.22 % from last quarter Total Income of Rs 23785.49 Crore and up 20.42 % from last year same quarter Total Income of Rs 21770.81 Crore. Company reported net profit after tax of Rs 2047.75 Crore in latest quarter.

Investment Rationale
M&M reported better than expected PAT in Q4FY22 on higher other income and lower tax rate. EBITDA margin at standalone was 60bps lower than our estimate as Tractor margins have shrunk on lower utilization and limited inflation pass-on. Auto margins were encouraging, driven by operating leverage and improved mix. Demand outlook is positive in both the segments. Tractor sales have surprised in April’22 and May is looking better as well. Hence, management is guiding a single digit growth for the industry in FY23. Auto segment is expected to grow on healthy order book for SUVs, new Scorpio-N launch, low base effect on CVs and expected improvement in chip supply. It is well placed to benefit from shift toward SUVs with the launch of models with better urban appeal. THe brokerage maintains buy with a revised TP of Rs1,186.

Promoter/FII Holdings
Promoters held 19.47 per cent stake in the company as of 31-Mar-2022, while FIIs owned 42.59 per cent, DIIs 23.49 per cent.