CMP Rs666, Target Rs788, Upside 18.3%
± Revenues increase 30.5% yoy driven by strong volume growth in both automotive and farm equipment segments
± OPM
at 13.3% was ahead of estimates owing to a sharp fall in overheads as a
percentage of net sales; Sequentially OPM improved by 61bps
± Volume
growth likely to continue driven by improved consumer sentiments in
rural areas backed by government initiatives to improve agricultural
productivity and credit availability
± We
value M&M at Rs788/share (9-month target), which includes Rs581 for
its automotive business (12x P/E for FY13E) and Rs207 for its
subsidiaries; Maintain BUY
