Buy Mahindra & Mahindra, target of Rs 756: Motilal Oswal

Motilal Oswal has maintained its buy rating on Mahindra & Mahindra with a target price of Rs 756 in its May 29, 2009 research report.

“M&M’s operational performance for 4QFY09 was significantly better than we had expected, driven by merger of PTL and cost savings, with EBITDA margins at 11.5% and adjusted PAT at Rs 2.8 billion. The management guided 5-8% volume growth in both UVs and tractors, coupled with full benefit of raw material cost savings. We are upgrading our standalone EPS estimate for FY10 by 11.7% to Rs 37.9 and consolidated EPS estimate by 1.2% to Rs 62.6 (despite ~8% dilution related to PTL merger) to factor in benefits of PTL merger, higher volumes and cost savings. The stock trades at 10.8x FY10E consolidated EPS and an EV of 9.7x FY10E consolidated EBITDA.”

“We remain positive on the core business of M&M and the accretion to its share value from its subsidiaries. The IPO of Mahindra Holidays will result in further value unlocking for the stock. The stock trades at 10.8x FY10E consolidated EPS and an EV of 9.7x FY10E consolidated EBITDA. We maintain ‘Buy’ with an SOTP-based target price of Rs 756,” says Motilal Oswal’s research report.

source: Moneycontrol

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