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									                                                                                               3QFY2012 Result Update | Automobile
                                                                                                                          February 7, 2012



 Mahindra and Mahindra                                                                          BUY
                                                                                                CMP                                     `689
 Performance Highlights                                                                         Target Price                            `795
 Y/E March (` cr)               3QFY12       3QFY11      % chg (yoy)   Angel est.     % diff    Investment Period             12 Months
 Net sales                         8,387       6,121           37.0          8,041       4.3
 Adj. EBITDA                         994         924            7.6            962       3.3
                                                                                               Stock Info
 Adj. EBITDA margin (%)             11.9        15.1        (324)bp           12.0   (11)bp
                                                                                               Sector                          Automobile
 Adj. PAT                            635         617            2.9            654     (2.9)
 Source: Company, Angel Research                                                               Market Cap (` cr)                        42,331
                                                                                               Beta                                        1.0
 Mahindra and Mahindra (MM) reported mixed results for 3QFY2012.
 The company registered better-than-expected top-line growth, led by robust                    52 Week High / Low                   875/585
 volume growth. However, net profit was below our estimates on account of                      Avg. Daily Volume                   218,106
 margin contraction due to higher purchases from its manufacturing subsidiary,                 Face Value (`)                               5
 Mahindra Vehicle Manufacturers Limited (MVML). We have lowered our earnings                   BSE Sensex                           17,622
 estimates for FY2012/13 by 6.8%/7% to factor in lower tractor volumes                         Nifty                                    5,335
 (8% growth in FY2013E from 12% earlier) and higher purchases from MVML.
                                                                                               Reuters Code                       MAHM.BO
 Nevertheless, due to attractive valuations, we maintain our Buy view on the stock.
                                                                                               Bloomberg Code                       MM@IN
 Margin pressures persist, impact results: For 3QFY2012, MM reported robust
 revenue growth of 37% yoy (13.9% qoq), driven by 47.4% and 23.2% yoy
 revenue growth in the automotive and farm equipment segments (FES),                           Shareholding Pattern (%)
 respectively. EBITDA margin at 11.9% (adjusted for reversal of forex loss) declined           Promoters                                 25.3
 by 324bp yoy, primarily due to increased purchases of finished products (up
                                                                                               MF / Banks / Indian Fls                   30.6
 265% yoy and 75% qoq) from MVML. Thus, adjusted net profit grew by modest
                                                                                               FII / NRIs / OCBs                         35.8
 2.9% yoy (down 17.4% qoq) to `635cr. Additionally, a 37.8% yoy (12% qoq)
 increase in depreciation expense impacted the bottom line. Quarterly results                  Indian Public / Others                     8.3
 (considering MM and MVML) registered a healthy performance, with EBITDA
 margin at 13.4% and adjusted net profit posting 11.6% yoy growth to `679cr.
                                                                                               Abs. (%)                  3m       1yr      3yr
 Outlook and valuation: We expect MM’s automotive segment to be the key
                                                                                               Sensex                   0.3   (2.3)      89.5
 volume driver (expected to register a 20.5% CAGR over FY2011-13E) going
 ahead, backed by the strength of the passenger utility vehicle (UV) and                       MM                   (17.4)    3.1 402.0
 four-wheeler pick-up portfolio. For FES, we have revised our volume (10.7%
 CAGR over FY2011-13E) estimates downwards, in-line with management’s
 guidance. We have also cut our earnings for FY2012E/13E to reflect margin
 pressures on account of increasing contribution from MVML. Nevertheless, given
 the attractive valuations, we maintain our Buy rating, valuing the stock on SOTP
 basis. Our revised SOTP target price works out to `795, wherein its core business
 fetches `609/share and value of its investments works out to `186/share.
 Key financials
 Y/E March (` cr)                  FY2010         FY2011          FY2012E            FY2013E
 Net sales                         18,363         23,044           30,397             35,422
 % chg                                42.1           25.5            31.9               16.5
 Adj. profit                        2,029          2,537            2,745              3,117
 % chg                               158.1           25.0              8.2              13.6
 Adj. OPM (%)                         14.8          13.0             11.9               11.8
 EPS (`)                              35.9          43.2             44.7               50.8
 P/E (x)                              19.2          16.0             15.4               13.6
 P/BV (x)                              5.0            3.9             3.1                2.6
 RoE (%)                              31.0          28.0             22.8               20.9
 RoCE (%)                             23.2          21.6             20.8               20.1
                                                                                               Yaresh Kothari
 EV/Sales (x)                          1.7            1.3             1.0                0.9
                                                                                               022-39357800 Ext: 6844
 EV/EBITDA (x)                        13.0          11.0              9.1                7.9   yareshb.kothari@angelbroking.com
 Source: Company, Angel Research


Please refer to important disclosures at the end of this report                                                                             1
                                                                              Mahindra and Mahindra | 3QFY2012 Result Update



Exhibit 1: Quarterly performance (Standalone)
Y/E March (` cr)                            3QFY12   3QFY11       yoy chg (%)        2QFY12          qoq chg (%)      9MFY12     9MFY11     yoy chg (%)
Net Sales                                    8,387       6,121             37.0        7,361                13.9       22,481    16,716           34.5
Consumption of RM                            4,680       3,810             22.9        4,454                    5.1    13,249    10,432           27.0
(% of sales)                                  55.8        62.2                          60.5                             58.9      62.4
Staff costs                                    450        348              29.4         430                     4.5     1,283     1,019           25.9
(% of sales)                                   5.4         5.7                              5.8                           5.7       6.1
Purchase of traded goods                     1,555        426               265         887                     75      3,161     1,043            203
(% of sales)                                  18.5         7.0                          12.1                             14.1       6.2
Other Expenses                                 708        614              15.3         683                     3.6     1,990     1,626           22.4
(% of sales)                                   8.4        10.0                              9.3                           8.9       9.7
Total Expenditure                            7,393       5,197             42.2        6,455                14.5       19,684    14,121           39.4
Operating Profit                               994        924               7.6         906                     9.7     2,797     2,594            7.8
OPM                                           11.9        15.1                          12.3                             12.4      15.5
Interest                                       6.8        (2.7)           (350)             4.9                 38        9.7     (34.5)         (128)
Depreciation                                   141        102              37.8         126                 12.0          376       297           26.8
Other Income                                    41          42             (2.6)        232               (82.4)          297       262           13.4
PBT (excl. Extr. Items)                        887        866               2.4        1,007              (11.9)        2,708     2,594            4.4
Extr. Income/(Expense)                          27        117             (77.1)        (32)             (184.2)           (5)      117               -
PBT (incl. Extr. Items)                        914        984              (7.1)        975                 (6.2)       2,703     2,712           (0.3)
(% of sales)                                  10.9        16.1                          13.2                             12.0      16.2
Provision for Taxation                         252        249               1.2         238                     6.0       699       656            6.5
(% of PBT)                                      28          25                              24                             26        24
Reported PAT                                   662        735              (9.9)        737               (10.2)        2,004     2,056           (2.5)
Adjusted PAT                                   635        617               2.9         769               (17.4)        2,009     1,938            3.7
PATM                                           7.6        10.1                          10.5              (27.5)          8.9      11.6
Equity capital (cr)                          294.2       293.6                         294.0                            294.2     293.6
EPS (`)                                       10.8        10.5              2.7         13.1              (17.5)         34.1      33.0            3.5
Source: Company, Angel Research



Exhibit 2: Quarterly volume performance
Volume (units)                    3QFY12       3QFY11       yoy chg (%)        2QFY12             qoq chg (%)         9MFY12      9MFY11 yoy chg (%)
 Total volumes                    190,743      153,833            24.0         178,848                   6.7          531,714     423,713         25.5
Auto Sales - Domestic             117,402       90,205            30.2         114,215                   2.8          327,897     255,967         28.1
Auto Sales - Exports                7,587        5,020            51.1              7,239                4.8           20,543      13,480         52.4
Total Auto Sales                  124,989       95,225            31.3         121,454                   2.9          348,440     269,447         29.3
Tractor Sales - Domestic           62,009       55,488            11.8             54,266               14.3          173,519     145,493         19.3
Tractor Sales - Exports             3,745        3,120            20.0              3,128               19.7            9,755       8,773         11.2
Total Tractor Sales                65,754       58,608            12.2             57,394               14.6          183,274     154,266         18.8
Source: Company, Angel Research




February 7, 2011                                                                                                                                      2
                                                                                                                            Mahindra and Mahindra | 3QFY2012 Result Update



                                                                                     Robust net sales growth of 37% yoy, driven by volume growth: MM reported robust
                                                                                     top-line growth of 37% yoy (13.9% qoq) to `8,387cr, driven by impressive volume
                                                                                     growth of 24% yoy (6.7% qoq) and strong net average realization growth of 10.6%
                                                                                     yoy (6.9% qoq). Volume performance was aided by sustained momentum in the
                                                                                     automotive segment, which registered growth of 31.3% yoy (2.9% qoq). In the
                                                                                     passenger UV segment, MM posted strong 22.9% yoy growth, retaining its
                                                                                     dominant position with a market share of 57.8% (54% in 2QFY2012). The farm
                                                                                     equipment segment, on the other hand, witnessed moderate growth of 12.2% yoy,
                                                                                     with domestic tractor volumes registering growth of 11.8% yoy. However, MM
                                                                                     managed to improve upon its domestic market share, which increased to 42.9%
                                                                                     (41.2% in 2QFY2012) at the end of 3QFY2012.


Exhibit 3: Strong volume momentum continues                                                                              Exhibit 4: Net average realization improves 10.6% yoy
 (units)                         Total volume                       yoy growth (RHS)                        (%)            (`)                             Net average realisation                                      yoy growth (RHS)                              (%)
250,000                                                                                                    70.0          450,000                                                                                                                                       12.0
               57.5                                                                                                      440,000                                                                                                                                   10.6
                                                                                                           60.0                                                                                                                                                        10.0
200,000                 47.4                                                                                             430,000                                                                                                                                      8.0
                                                                                                           50.0
                                                                                                                         420,000                                                                                                     6.2                              6.0
150,000                                               32.5                                                 40.0          410,000
                                                                                     29.9                                                                                                                                                           5.9
                                                                                                                                                                                                                                                                      4.0
                                   24.5                                    22.6                24.0        30.0          400,000                                                                                      3.6
100,000                                      20.8                22.2                                                                                                                               2.3                                                               2.0
                                                                                                                         390,000                            (1.0)
                                                                                                           20.0                                                                            (1.6)                                                                      0.0
                                                                                                                         380,000                   (0.7)
 50,000
                                                                                                           10.0          370,000                                                                                                                                      (2.0)
                                                                                                                                                                             (2.7)
           0                                                                                               0.0           360,000                                                                                                                                      (4.0)
                                                                                                                                          3QFY10


                                                                                                                                                       4QFY10


                                                                                                                                                                    1QFY11


                                                                                                                                                                                  2QFY11


                                                                                                                                                                                               3QFY11


                                                                                                                                                                                                             4QFY11


                                                                                                                                                                                                                            1QFY12


                                                                                                                                                                                                                                           2QFY12


                                                                                                                                                                                                                                                          3QFY12
               3QFY10


                        4QFY10


                                    1QFY11


                                             2QFY11


                                                      3QFY11


                                                                  4QFY11


                                                                           1QFY12


                                                                                      2QFY12


                                                                                               3QFY12




Source: Company, Angel Research                                                                                          Source: Company, Angel Research



Exhibit 5: Segmental performance
Y/E March (` cr)                                      3QFY12                3QFY11                      yoy chg (%)         2QFY12                    qoq chg (%)                          9MFY12                     9MFY11                         yoy chg (%)
Total Net Sales                                                8,392                6,131                        36.9            7,368                              13.9                    22,501                     16,742                                        34.4
Auto segment                                                   5,116                3,472                        47.4            4,518                              13.3                    13,492                      9,675                                        39.4
Farm segment                                                   3,251                2,638                        23.2            2,826                              15.1                      8,939                     6,997                                        27.7
Other segments                                                   25                    21                        18.6               25                                  1.0                             70                           69                                0.7
Total PBIT                                                      930                  914                          1.7              883                                  5.4                   2,686                     2,535                                          6.0
Auto segment                                                    418                  427                         (2.0)             448                              (6.7)                     1,280                     1,299                                        (1.4)
Farm segment                                                    508                  487                          4.4              433                              17.5                      1,398                     1,233                                        13.4
Other segments                                                   3.6                  0.6                                           2.1                             73.6                            7.8                          3.6                                116.4
PBIT/ Sales (%)                                                 11.1                 14.9                                          12.0                                                            11.9                      15.1
Auto segment                                                     8.2                 12.3                    (412)                  9.9                         (175)                               9.5                      13.4                                    (394)
Farm segment                                                    15.6                 18.5                    (283)                 15.3                                      33                    15.6                      17.6                                    (197)
Other segments                                                  14.5                  2.9                                           8.5                                                            11.1                          5.2
Source: Company, Angel Research




February 7, 2011                                                                                                                                                                                                                                                            3
                                                                                                        Mahindra and Mahindra | 3QFY2012 Result Update



                                                                               Margin pressures continue, down 324bp yoy to 11.9%: MM’s EBITDA margin
                                                                               contracted by 324bp yoy (46bp qoq) to 11.9%, largely driven by increased
                                                                               purchase of finished products (up 265% yoy and 75% qoq) from the
                                                                               manufacturing subsidiary, MVML. As a result, total raw-material cost as a
                                                                               percentage of sales increased by 515bp yoy (178bp qoq) to 74.3%. However,
                                                                               continued cost-rationalization measures resulted in a 160bp yoy (110bp qoq)
                                                                               decline in other expenditure. EBIT margin of the automotive and farm equipment
                                                                               segments declined by 412bp yoy (175bp qoq) and 283bp yoy (up 33bp qoq) to
                                                                               8.2% and 15.6%, respectively.

                                                                               Including MVML’s operations, operating margin was relatively stable and
                                                                               expanded by 50bp qoq to 13.4%.

Exhibit 6: RM cost pressure continues to impact margin                                              Exhibit 7: Adjusted net profit up by 2.9% yoy
  (%)                     EBITDA margin                  Raw material cost/sales                     (` cr)                     Net profit                 Net profit margin (RHS)                       (%)
                                                                      72.4        73.1     74.9      800                                                                                                 16.0
80.0                          70.1     68.7     69.7        71.7                                                                         14.0
        67.3     67.9
70.0                                                                                                 700                                                                                                 14.0
                                                                                                                                                  10.1              9.0
                                                                                                                       10.8     10.9                       8.9
60.0                                                                                                 600                                                                               10.0              12.0
                                                                                                              9.4
50.0                                                                                                 500                                                                                                 10.0
                                                                                                                                                                                                   7.6
40.0                                                                                                 400                                                                                                 8.0
30.0                                                                                                 300                                                                                                 6.0
        14.9     15.9         15.0     16.5     15.1
20.0                                                        12.7      13.3        12.3     11.9
                                                                                                     200                                                                                                 4.0
10.0
                                                                                                     100                                                                                                 2.0
 0.0
                                                                                                        0                                                                                                0.0
        3QFY10


                 4QFY10


                              1QFY11


                                       2QFY11


                                                3QFY11


                                                             4QFY11


                                                                      1QFY12


                                                                                  2QFY12


                                                                                           3QFY12




                                                                                                              3QFY10


                                                                                                                       4QFY10


                                                                                                                                1QFY11


                                                                                                                                         2QFY11


                                                                                                                                                  3QFY11


                                                                                                                                                           4QFY11


                                                                                                                                                                     1QFY12


                                                                                                                                                                              2QFY12


                                                                                                                                                                                          3QFY12
Source: Company, Angel Research                                                                     Source: Company, Angel Research


                                                                               Reported net profit up by moderate 2.9% yoy: The company’s net profit for the
                                                                               quarter registered moderate 2.9% yoy (down 17.4% qoq) growth to `635cr,
                                                                               primarily due to contraction in operating margin. Further, higher depreciation
                                                                               expense (up 37.8% yoy and 12% qoq) and increased tax rate (28% in 3QFY2012
                                                                               vs. 25% in 3QFY2011) negatively affected the company’s bottom-line growth.




February 7, 2011                                                                                                                                                                                               4
                                          Mahindra and Mahindra | 3QFY2012 Result Update



                   Exhibit 8: Quarterly performance (MM + MVML)
                   Y/E March (` cr)     3QFY12       3QFY11 yoy chg (%)    9MFY12   9MFY11 yoy chg (%)
                    Net sales             8,216        6,134       33.9    22,277   16,735        33.1
                    Total expenditure     7,113        5,165       37.7    19,228   14,063        36.7
                    Material cost         5,903        4,170       41.6    15,809   11,342        39.4
                    % of net sales         71.8         68.0       387       71.0      67.8       319
                    Employee expense        475         362        31.4     1,350    1,053        28.2
                    % of net sales           5.8         5.9       (11)       6.1       6.3       (23)
                    Other expenses          735         634        15.9     2,068    1,668        24.0
                    % of net sales           8.9        10.3      (139)       9.3      10.0       (68)
                    Operating profit      1,103         969        13.8     3,049    2,672        14.1
                    OPM (%)                13.4         15.8      (237)      13.7      16.0      (228)
                    Depreciation            164         119        38.5       443      340        30.3
                    EBIT                    939         850        10.4     2,606    2,332        11.8
                    Interest                 34          19        83.9        93       25       278.5
                    Other income             41          42        (1.7)      297      262        13.5
                    PBT                     945         873         8.2     2,810    2,569         9.4
                    Exceptional items        27         117            -       27      117           -
                    PBT                     972         990        (1.9)    2,836    2,686         5.6
                    Tax expense             266         264         0.5       724      672         7.8
                    Tax rate               27.4         26.7                 25.8      25.0
                    PAT                     706         726        (2.8)    2,113    2,015         4.9
                    Adj. PAT                679         608        11.6     2,086    1,897         9.9
                   Source: Company, Angel Research




February 7, 2011                                                                                     5
                                         Mahindra and Mahindra | 3QFY2012 Result Update



                   Investment arguments
                       Strong growth in the auto segment to offset slowdown in the FES segment:
                       Outlook for tractor sales appears to be challenging given that the industry has
                       witnessed just 3-3.5% growth in the past three months and management has
                       guided for moderate growth of 6-8% in FY2013E. However, MM’s automotive
                       volume growth continues to surprise positively, with 29.3 yoy growth witnessed
                       in YTD FY2012. Further, strong response to the recently launched XUV500,
                       continued momentum in the pick-up segment and likely launch of the new
                       Xylo should sustain automotive sales going ahead and somewhat offset weak
                       tractor demand.

                       New ventures firming up well: MM’s new ventures in the CV space are firming
                       up well. New product launches such as GIO and Maxximo have received good
                       response. Further, launch of new products in the M&HCV space has positioned
                       the company in-line with other major domestic CV players such as Ashok
                       Leyland and Tata Motors. This is expected to substantially augment the
                       company’s overall volume growth, supported by its well-known brand equity
                       and extensive sales network.

                       Investments constitute 71% of the balance sheet: MM also has majority stakes
                       in various listed companies in other sectors, including technology, property
                       and finance. The high-growth potential of MM's subsidiaries is expected to
                       unlock the actual value of the stock over the years. Listing of its subsidiaries
                       has been supporting the company’s valuation in the recent past and may
                       continue to do so in the long term as well.

                   Outlook and valuation

                   We expect MM’s automotive segment to be the key volume driver (expected to
                   register a 20.5% CAGR over FY2011-13E) going ahead, backed by the strength of
                   the passenger UV and four-wheeler pick-up portfolio. For FES, we have revised our
                   volume (10.7% CAGR over FY2011-13E) estimates downwards, in-line with
                   management’s guidance. We have also cut our earnings for FY2012/13
                   by 6.8%/7% to reflect margin pressures on account of increasing contribution
                   from MVML.

                   Nevertheless, given the attractive valuations, we maintain our Buy rating, valuing
                   the stock on SOTP basis. Our revised SOTP target price works out to `795,
                   wherein its core business fetches `609/share and value of its investments works out
                   to `186/share.




February 7, 2011                                                                                     6
                                                             Mahindra and Mahindra | 3QFY2012 Result Update



                                   Exhibit 9: SOTP valuation
                                                                                            No. of Shares        CMP        Value
                                   Key Subsidiary
                                                                                                 (cr)             (`)       (` cr)
                                   Mahindra Financial Services                                  5.4              690       3,727
                                   Mahindra Lifespace Developers                                1.5              310             477
                                   Tech Mahindra                                                5.4              643       3,455
                                   Mahindra Forgings                                            4.2                59            245
                                   Mahindra Holidays and Resorts                                7.0              300       2,100
                                   Mahindra Ugine Steel                                         1.7                55            90
                                   Other Investments (at book value)                                                       5,479
                                   Total value (` cr)                                                                     15,574
                                   Per share value of investments (30% discount)                                                 186
                                   MM's Core Business/share value (12x FY13E EPS)                                            609
                                   MM's Target Price with investments (`)                                                        795
                                   Source: Company, Angel Research



Exhibit 10: Key assumptions
Y/E March (units)                     FY08               FY09           FY10            FY11            FY12E              FY13E
 Passenger Utility Vehicles (UV)   148,761            214,128        150,726         169,205          196,278           224,738
4-wheeler pick-up                            -               -         76,387        105,588          152,047           179,415
 LCV                                10,398               9,792          9,829         11,077            12,739            14,267
 Logan                              25,891               5,332          5,332         10,009            18,016            20,719
 Three wheelers                     33,927              57,424         44,439         62,142            69,599            75,167
 Exports                            25,657              10,815         11,567         19,042            26,659            33,324
 Total Automotive Sales            244,634            297,491        298,280         377,063          475,337           547,629
 Domestic Tractor Sales             90,037            165,581        165,633         201,785          229,026           247,348
 Exports Tractor Sales               8,677               8,999          9,001         11,868            13,411            14,484
 Total Tractor Sales                98,714            174,580        174,634         213,653          242,437           261,832
 Total Volume                      343,348            472,071        472,914         590,716          717,774           809,461
Source: Company, Angel Research



                                   Exhibit 11: Angel vs. consensus forecast
                                                            Angel estimates          Consensus                   Variation (%)
                                                           FY12E       FY13E       FY12E        FY13E       FY12E          FY13E
                                   Net sales (` cr)       30,397     35,422        29,485      34,058            3.1             4.0
                                   EPS (`)                  44.7        50.8         44.2        50.6            1.2             0.3
                                   Source: Bloomberg, Angel Research




February 7, 2011                                                                                                                   7
                                                                                                                                                        Mahindra and Mahindra | 3QFY2012 Result Update



Exhibit 12: One-year forward P/E chart                                                                                                               Exhibit 13: Premium/Discount to Sensex P/E
 (x)                              Absolute P/E                                     Five-yr average P/E                                                 (%)                                   Absolute premium                                             Five-yr average P/E
30.0                                                                                                                                                  60.0

25.0                                                                                                                                                  40.0

                                                                                                                                                      20.0
20.0
                                                                                                                                                       0.0
15.0
                                                                                                                                                     (20.0)
10.0
                                                                                                                                                     (40.0)
 5.0                                                                                                                                                 (60.0)

 0.0                                                                                                                                                 (80.0)




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Source: Company, Bloomberg, Angel Research                                                                                                           Source: Company, Bloomberg, Angel Research




Exhibit 14: Automobile – Recommendation summary
                                                                               CMP Tgt. price                        Upside                           P/E (x)                                EV/EBITDA (x)                                      RoE (%)                             FY11-13E EPS
Company                           Reco.
                                                                                (`)        (`)                          (%)                         FY12E       FY13E                     FY12E                      FY13E                  FY12E                 FY13E                      CAGR (%)
Ashok Leyland                     Buy                                            26                        32                24.3                    11.7               9.4                        6.3                        5.2               14.2                15.9                                       7.3
Bajaj Auto                        Accumulate                               1,636                  1,755                       7.3                    14.9              14.0                    10.0                           8.7               55.0                44.7                                 11.0
Hero MotoCorp                     Neutral                                  1,950                            -                          -             16.6              14.4                        9.6                        8.0               66.2                55.0                                 21.0
Maruti Suzuki                     Neutral                                  1,245                            -                          -             26.0              15.6                    17.1                           9.4                 9.6               14.4                                       1.1
MM                                Buy                                          689                    795                    15.3                    15.4              13.6                        9.1                        7.9               22.8                20.9                                       8.4
Tata Motors                       Neutral                                      250                          -                          -              8.8               8.6                        5.7                        5.4               39.8                31.1                                       1.0
TVS Motor                         Buy                                            50                        66                32.8                     9.3               8.3                        4.8                        3.9               23.2                22.0                                 17.6
Source: Company, Bloomberg, Angel Research




February 7, 2011                                                                                                                                                                                                                                                                                                    8
                                            Mahindra and Mahindra | 3QFY2012 Result Update



                   Profit & Loss Statement
                   Y/E March (` cr)                 FY08    FY09      FY10     FY11    FY12E    FY13E
                   Gross sales                    12,866 14,514      20,157   25,137   32,773   38,190
                   Less: Excise duty               1,585    1,587     1,794    2,093    2,376    2,769
                   Net Sales                      11,282 12,927      18,363   23,044   30,397   35,422
                   Total operating income         11,282 12,927      18,363   23,044   30,397   35,422
                   % chg                            14.5     14.6      42.1     25.5     31.9     16.5
                   Total Expenditure              10,187 12,035      15,647   20,038   26,766   31,228
                   Net Raw Materials               7,726    9,274    12,346   16,263   21,825   25,362
                   Other Mfg costs                  300      311       379      444      594      726
                   Personnel                        862     1,018     1,190    1,438    1,915    2,249
                   Other                           1,300    1,431     1,732    1,892    2,432    2,890
                   EBITDA                          1,094     892      2,716    3,006    3,631    4,194
                   % chg                             3.5    (18.5)    204.5     10.7     20.8     15.5
                   (% of Net Sales)                  9.7      6.9      14.8     13.0     11.9     11.8
                   Depreciation & Amortization      239      292       371      414      521      611
                   EBIT                             856      600      2,345    2,593    3,110    3,583
                   % chg                             0.9    (29.8)    290.6     10.5     20.0     15.2
                   (% of Net Sales)                  7.6      4.6      12.8     11.3     10.2     10.1
                   Interest & other Charges           88     134       157       71       81       72
                   Other Income                     639      601       658      998      666      730
                   (% of PBT)                       51.1     61.0      23.6     29.4     18.0     17.2
                   Recurring PBT                   1,407    1,067     2,847    3,520    3,695    4,241
                   % chg                            (0.8)   (24.1)    166.7     23.6      5.0     14.8
                   Extraordinary Expense/(Inc.)    (156)      (81)     (59)    (125)        -        -
                   PBT                             1,251     986      2,788    3,394    3,695    4,241
                   Tax                              303      200       759      858      950     1,124
                   (% of PBT)                       24.3     20.3      27.2     25.3     25.7     26.5
                   PAT (reported)                  1,103     868      2,088    2,662    2,745    3,117
                   ADJ. PAT                         947      786      2,029    2,537    2,745    3,117
                   % chg                            (2.8)   (17.0)    158.1     25.0      8.2     13.6
                   (% of Net Sales)                  8.4      6.1      11.0     11.0      9.0      8.8
                   Basic EPS (`)                    23.1     15.9      36.9     45.3     44.7     50.8
                   Fully Diluted EPS (`)            19.8     14.4      35.9     43.2     44.7     50.8
                   % chg                            (3.3)   (27.2)    148.7     20.5      3.5     13.6




February 7, 2011                                                                                     9
                                               Mahindra and Mahindra | 3QFY2012 Result Update



                   Balance Sheet
                   Y/E March (` cr)                     FY08     FY09     FY10     FY11    FY12E   FY13E
                   SOURCES OF FUNDS
                   Equity Share Capital                  239      273      283      294     307     307
                   Reserves & Surplus                  4,111     4,989    7,544 10,020 13,476 15,690
                   Shareholders’ Funds                 4,350     5,262    7,827 10,313 13,783 15,997
                   Total Loans                         2,587     4,053    2,880    2,405   2,705   2,405
                   Deferred Tax Liability                 57      (18)     240      354     354     354
                   Total Liabilities                   6,994     9,297 10,947 13,073 16,842 18,757
                   APPLICATION OF FUNDS
                   Gross Block                         3,656     4,894    5,276    6,228   7,895   9,396
                   Less: Acc. Depreciation             1,842     2,326    2,538    2,842   3,363   3,974
                   Net Block                           1,814     2,568    2,739    3,386   4,533   5,422
                   Capital Work-in-Progress              546      647      964      986    1,026   1,127
                   Goodwill                                 -        -        -        -       -       -
                   Investments                         4,215     5,786    6,398    9,325 11,790 12,755
                   Current Assets                      3,644     5,081    6,047    6,143   7,953   8,815
                   Cash                                  861     1,574    1,743     615     919     984
                   Loans & Advances                      694     1,402    1,856    2,480   3,040   3,542
                   Other                               2,089     2,104    2,447    3,049   3,995   4,288
                   Current liabilities                 3,240     4,798    5,200    6,768   8,460   9,362
                   Net Current Assets                    404      283      847     (624)   (506)   (547)
                   Mis. Exp. not written off              14       13         -        -       -       -
                   Total Assets                        6,994     9,297 10,947 13,073 16,842 18,757




                   Cash Flow Statement
                   Y/E March (` cr)                      FY08     FY09     FY10     FY11   FY12E   FY13E
                   Profit before tax                    1,251      986    2,788    3,394   3,695   4,241
                   Depreciation                           239      292      371      414    521     611
                   Change in Working Capital              213      834     (394)     342    195     102
                   Less: Others                            65      320      990      685       -       -
                   Other income                          (639)    (601)    (658)   (998)   (666)   (730)
                   Direct taxes paid                     (303)    (200)    (759)   (858)   (950) (1,124)
                   Cash Flow from Operations              826    1,631    2,337    2,980   2,796   3,099
                   (Inc.)/Dec. in Fixed Assets           (692) (1,338)     (700)   (973) (1,708) (1,601)
                   (Inc.)/Dec. in Investments          (1,978) (1,571)     (612) (2,927) (2,464)   (965)
                   Other income                           639      601      658      998    666     730
                   Cash Flow from Investing            (2,031) (2,308)     (653) (2,903) (3,507) (1,836)
                   Issue of Equity                         28        1      719    1,006   1,613       -
                   Inc./(Dec.) in loans                   951    1,466 (1,173)     (475)    300    (300)
                   Dividend Paid (Incl. Tax)              325      321      312      624    898     898
                   Others                                (157)     449       19      291       -       -
                   Cash Flow from Financing               811      697     (784)   (383)   1,015 (1,198)
                   Inc./(Dec.) in Cash                   (394)      19      899    (306)    304      66
                   Opening Cash balances                1,363      861    1,574    1,743    615     919
                   Closing Cash balances                  861    1,574    1,743      615    919     984




February 7, 2011                                                                                     10
                                               Mahindra and Mahindra | 3QFY2012 Result Update



                   Key Ratios
                    Y/E March                       FY08     FY09    FY10     FY11     FY12E    FY13E
                    Valuation Ratio (x)
                    P/E (on FDEPS)                   34.8    47.8     19.2     16.0     15.4     13.6
                    P/CEPS                           24.6    32.4     16.3     13.7     13.0     11.4
                    P/BV                              7.6     7.2      5.0      3.9      3.1      2.6
                    Dividend yield (%)                0.9     0.7      1.4      1.7      1.8      1.8
                    EV/Sales                          3.0     2.6      1.7      1.3      1.0      0.9
                    EV/EBITDA                        34.7    41.7     13.0     11.0      9.1      7.9
                    EV / Total Assets                 5.4     4.0      3.2      2.5      1.9      1.7
                    Per Share Data (`)
                    EPS (Basic)                      23.1    15.9     36.9     45.3     44.7     50.8
                    EPS (fully diluted)              19.8    14.4     35.9     43.2     44.7     50.8
                    Cash EPS                         28.1    21.3     42.4     50.2     53.2     60.7
                    DPS                               5.9     5.1      9.7     12.0     12.5     12.5
                    Book Value                       90.7    96.3    138.1    175.4    224.3    260.4
                    Dupont Analysis
                    EBIT margin                       7.6     4.6     12.8     11.3     10.2     10.1
                    Tax retention ratio               0.8     0.8      0.7      0.7      0.7      0.7
                    Asset turnover (x)                2.3     1.9      2.2      2.1      2.1      2.1
                    ROIC (Post-tax)                  13.0     6.9     20.2     17.9     16.3     15.6
                    Cost of Debt (Post Tax)           3.1     3.2      3.3      2.0      2.4      2.1
                    Leverage (x)                      0.0     0.0      0.0      0.0      0.0      0.0
                    Operating ROE                    13.0     6.9     20.2     17.9     16.3     15.6
                    Returns (%)
                    ROCE (Pre-tax)                   14.0     7.4     23.2     21.6     20.8     20.1
                    Angel ROIC (Pre-tax)             11.0     6.3     18.7     15.8     14.5     14.8
                    ROE                              24.0    16.4     31.0     28.0     22.8     20.9
                    Turnover ratios (x)
                    Asset Turnover                    3.3     3.0      3.6      4.0      4.3      4.1
                    Inventory / Sales (days)           32      30       22       23       23       23
                    Receivables (days)                 28      29       23       21       21       20
                    Payables (days)                    69      82       69       65       67       74
                    WC (ex-cash) (days)              (11)    (25)     (22)     (17)     (16)     (15)
                    Solvency ratios (x)
                    Net debt to equity               (0.6)   (0.6)    (0.7)    (0.7)    (0.7)    (0.7)
                    Net debt to EBITDA               (2.3)   (3.7)    (1.9)    (2.5)    (2.8)    (2.7)
                    Interest Coverage                 9.8     4.5     15.0     36.6     38.3     49.7




February 7, 2011                                                                                    11
                                                                           Mahindra and Mahindra | 3QFY2012 Result Update




  Research Team Tel: 022 - 39357800                   E-mail: research@angelbroking.com                    Website: www.angelbroking.com

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  Disclosure of Interest Statement                                       Mahindra and Mahindra
  1. Analyst ownership of the stock                                                   No
  2. Angel and its Group companies ownership of the stock                             No
  3. Angel and its Group companies' Directors ownership of the stock                  No
  4. Broking relationship with company covered                                        No

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  Ratings (Returns):              Buy (> 15%)                            Accumulate (5% to 15%)                     Neutral (-5 to 5%)
                                  Reduce (-5% to 15%)                    Sell (< -15%)


February 7, 2011                                                                                                                           12

								
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