This major auto company’s net profit rose 67% in the first quarter, buy shares for a short-term return of 26%: ICICI Securities
Stock to buy: target price and financial result
The current market price (CMP) of Mahindra & Mahindra is Rs. 1235. ICICI Securities has estimated a target price for the stock at Rs. 1550. This stock has the potential to give a return of 26%, in the next 1 year. It is a large cap stock with a market capitalization of around Rs. 153,646 crores.
|Stock market outlook|
|Current market price (CMP)||Rs.1235|
|Potential return over 1 year||26.00%|
|Stock price at 52-week high||Rs.1,278.50|
|52 week low price||Rs.671.15|
The company reported stable results in the first quarter of FY23. Its standalone net sales increased by 14.5% QoQ to Rs. 19,613 crore and EBITDA margins at 11.9% increased by 57 points basic QoQ. Additionally, M&M’s standalone PAT for the quarter came in at Rs. 1,430.2 crore up 10.7% QoQ. The company’s revenue increased by 67% year-on-year to Rs. 19,613 crore from Rs. 11,765 in Q1FY23.
ICICI Securities: Advantages of the action
Commenting on the stock, ICICI Securities said, “We built a CAGR of 17.1%, 23.4% total volume, sales in fiscal year 22-24E on the back of a healthy backlog amid robust consumer response to new launches With operating leverage benefits in play, improved product mix (higher share of premium models in the PV space) and focus on optimizing costs; we expect EBITDA margins of 12.7% and a stand-alone RoCE of around 14% by FY24E Continued focus on prudent capital allocation (>18% RoCE), aggressive EV launch, dominant position in rural markets to play a positive role.
“The share price rose at ~12% CAGR from levels of ~Rs. 710 in August 2017, outperforming the broader Nifty Auto Index. leads to healthy demand outlook on M&M’s product profile and tangible steps towards EV Transformation We value M&M at a target price based on SOTP of Rs. 1,550 (10x FY24E standalone EV/EBITDA; 30% discount of the investment holding company, Rs. 225/accumulated share value following the recent capital increase for the electric PV arm),” the brokerage firm added.
Mahindra & Mahindra (M&M) is a conglomerate involved in automotive, IT, financial services, logistics, hospitality and real estate, among others. At a standalone level, it is India’s largest tractor manufacturer (~40% market share in FY22) and the second-largest CV, fourth-largest PV manufacturer (24.7%, 7, 4% market share for fiscal year 22). Its capital expenditures are dedicated to building capacity in response to the robust demand outlook.
The stock above was taken from ICICI Securities’ brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article.