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Mahindra & Mahindra (Q4 FY12)

Volume growth for auto business to outpace growth in the tractors business

January 01, 1970 5:30 IST | India Infoline News Service
CMP Rs657, Target Rs766, Upside 16.6%
 
  • Revenues  increase 38% yoy driven by strong volume growth in both automotive segment, offset by decline in sales volumes for farm equipment segment
  • OPM at 10.3% was lower than our estimates, OPM declined 253bps yoy and 188bps qoq driven by higher raw material costs
  • Including MVML, OPM was lower by 191bps yoy and 166bps qoq at 12.1%
  • Exceptional items and tax credit results in better than estimated PAT of Rs8.7bn
  • Volume growth for auto business to outpace growth in the tractors business
  • We value M&M at Rs766/share (9-month target), which includes Rs601 for its automotive business (11x P/E for FY14E) and Rs165 for its subsidiaries

Result table

(Rs m) Q4 FY12 Q4 FY11 % yoy Q3 FY12 % qoq
Net sales 93,872 67,692 38.7 83,829 12.0
Material costs (70,894) (47,883) 48.1 (62,354) 13.7
Personnel costs (4,294) (4,176) 2.8 (4,473) (4.0)
Other overheads (8,990) (6,928) 29.8 (6,772) 32.7
Operating profit 9,694 8,706 11.3 10,230 (5.2)
OPM (%) 10.3 12.9 (253) bps 12.2 (188) bps
Depreciation (1,997) (1,171) 70.6 (1,408) 41.8
Interest (709) (171) 314.9 (348) 103.9
Other income 956 716 33.5 667 43.4
Extra ordinary items 1,083 - - - -
PBT 9,026 8,080 11.7 9,141 (1.3)
Tax (281) (2,015) (86.1) (2,519) (88.8)
Effective tax rate (%) 3.1 24.9   27.6  
Adjusted PAT 8,745 6,065 44.2 6,622 32.1
Adj. PAT margin (%) 9.3 9.0 36 bps 7.9 142 bps
Ann. EPS (Rs) 59.5 48.1   23.8 48.5   22.6
Source: Company, India Infoline Research

Segmental performance
Revenue (Rs mn) Q4 FY12 Q4 FY11 % yoy Q3 FY12 % qoq
Automotive 66,137 39,567 67.2 51,152 29.3
Farm equipments 27,611 27,939 (1.2) 32,486 (15.0)
Others 196 288 (32.2) 248 (21.3)
Total 93,944 67,794 38.6 83,886 12.0
           
EBIT (Rs mn) Q4 FY12 Q4 FY11 % yoy Q3 FY12 % qoq
Automotive 5,759 4,182 37.7 4,179 37.8
Farm equipments 4,342 4,756 (8.7) 5,084 (14.6)
Others 31 60 (47.2) 36 (13.0)
Total 10,132 8,997 12.6 9,299 9.0
           
EBIT Margin (%) Q4 FY12 Q4 FY11 bps yoy Q3 FY12 bps qoq
Automotive 8.7 10.6 (186) 8.2 54
Farm equipments 15.7 17.0 (130) 15.7 7
Others 16.1 20.6
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