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)
Feb-07
Sep-04
Jul-06
Sep-07
Jul-09
May-08
May-11
Dec-08
Jun-03
Jan-04
Jan-12
Apr-02
Apr-05
Mar-10
Nov-02
Nov-05
Oct-10
Feb-07
Jul-08
May-04
May-11
Dec-02
Dec-09
Jun-06
Jan-05
Jan-12
Aug-03
Aug-10
Apr-02
Apr-09
Oct-05
Nov-07
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
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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