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  • Company Update: Mahindra & Mahindra – ACCUMULATE – TP Rs.958

    Publish date: 28th June, 2018

    We attended the farm equipment segment (FES) investor day and visited M&M’s tractor plant at Nagpur. In the meet, M&M shared its global strategy in the farm equipment segment.

    Key Highlights

    In the global FES industry, M&M has 2% global market share. M&M will be focussing on small farm holdings. M&M's overall strategy in the farm equipment segment is focused on significantly growing its global business, focus on farm machinery segment in India and global markets, use of technology, gain market share in the domestic tractor market and improve financial performance across all companies in the farm equipment segment. M&M is aiming at increasing global revenue share in the farm equipment segment from 37% to 50% and improve their EBIT margins.

    Valuation & outlook

    M&M has planned few new products in the passenger vehicle segment in FY19. We expect these new launches coupled with volume growth in the commercial vehicle segment to drive revenue growth in the auto segment over FY19/FY20. In the tractor segment, expectation of normal monsoon will likely support tractor demand in FY19. On the back of cost saving program and economies of scale of higher volumes, we expect the company to broadly maintain its EBITDA margin near FY18 levels. We retain ACCUMULATE on the stock with unchanged price target of Rs 958.


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