Mahindra & Mahindra will launch models, focus on EV portfolio, focus on sport utility vehicle (SUV) core brand differentiation and will build path to profitability for global subsidiaries
Chirag Batavia • 28 June 2021
Mahindra & Mahindra (M&M): BUY
Dated: 28 th June 2021
CMP: Rs.794
Fair Value: Rs.975
Potential Upside: 22.8%
Market Cap: Rs.98,685 Cr
Time Frame: 12 months
- From FY22E onwards (Fly strategy), the company will launch models, focus on EV portfolio, focus on sport utility vehicle (SUV) core brand differentiation and will build path to profitability for global subsidiaries
- The company expects to launch new Scorpio, W620 and XUV700 in CY21-22E. The company intends to launch nine new products by CY26E. In the light commercial vehicle (LCV) business, the company will launch 14 new products by CY26E to strengthen its leadership position.
- The company highlighted tractor segment fundamentals continue to remain strong. The company has guided for low single-digit domestic tractor industry volume growth on a yoy basis in FY22E.
- M&M management has taken multiple steps to improve its capital-allocation strategy by selling stakes in lossmaking subsidiaries and exiting certain JVs or deals which would have consumed capital.
- Turnaround in international farm and auto subsidiaries will aid the company to meet its return on equity (RoE) target. We value M&M on sum-of-the-parts valuation.
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Home First Finance (HOMEFIRST) Home First remains consistent on operational and financial parameters. Home First (HFFC) reported 24% earnings growth, with 19% net interest income growth in Q2FY25. Gross stage-3 ratio was flat qoq at 1.7%, stage-2 ratio declined 6 bps qoq to 1.1%. While other asset classes have reported mixed trends residential home loans, as an asset class, continues to stand tall. Home First, with 85% home loan exposure, is well-placed on the above. We expect the company to deliver 25% earnings CAGR for FY25-27E. We remain assertive with a BUY rating and FV of Rs1,360 (no change). Note: The above is a brief note on the company, based on the inputs of KIEresearch report dated 25111Oct, 2024, which is available onour website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamenta1. Disclaimer: http://bit.ly/2n5Ax1E https://www.kotaksecurities.oom/ksweb/research/kotak-research-reports/top-weekly-picks
