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| India Infoline Research Team / 11:44 , Jul 29, 2010 |
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CMP Rs644, Target Rs712, Upside 10.6%
- Revenues increase 22% yoy driven by strong volume growth in both automotive and farm equipment segments
- OPM at 15% against our expectation of 14.4%
- Volume growth likely to continue driven by improved consumer sentiments in rural areas as current monsoon expected to be close to normal.
- We value M&M at Rs712/share, which includes Rs511 for its automotive business (8x EV/EBIDTA for FY12E) and Rs201 for its subsidiaries; Upgrade to BUY
Result table
| (Rs m) |
Q1 FY11 |
Q1 FY10 |
% yoy |
Q4 FY10 |
% qoq |
| Net sales |
51,601 |
42,426 |
21.6 |
52,789 |
(2.2) |
| Material costs |
(35,905) |
(28,056) |
28.0 |
(35,845) |
0.2 |
| Personnel costs |
(3,137) |
(3,083) |
1.8 |
(2,661) |
17.9 |
| Other overheads |
(4,803) |
(5,198) |
(7.6) |
(6,084) |
(21.1) |
| Operating profit |
7,756 |
6,090 |
27.4 |
8,198 |
(5.4) |
| OPM (%) |
15.0 |
14.4 |
68 bps |
15.5 |
(50) bps |
| Depreciation |
(976) |
(885) |
10.3 |
(947) |
3.0 |
| Interest |
227 |
(60) |
(481.5) |
(9) |
(2,622.2) |
| Other income |
205 |
236 |
(13.1) |
181 |
13.0 |
| PBT |
7,211 |
5,381 |
34.0 |
7,423 |
(2.8) |
| Tax |
(1,588) |
(1,373) |
15.7 |
(1,978) |
(19.7) |
| Effective tax rate (%) |
22.0 |
25.5 |
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26.6 |
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| Adjusted PAT |
5,624 |
4,009 |
40.3 |
5,445 |
3.3 |
| Adj. PAT margin (%) |
10.9 |
9.4 |
145 bps |
10.3 |
58 bps |
| Ann. EPS (Rs) |
39.7 |
31.8 |
25.1 |
39.9 |
(0.4) | Source: Company, India Infoline Research
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