BUY

Initiating Coverage Mahindra CIE Automotive Ltd Target Price

12thApril, 2023 Auto Ancillary 475

Market Share Gains & Profitability to Drive

rive Growth; Valuations Attractive
CMP as of 11th Apr, 2023
We initiate coverage on Mahindra CIE Automotive (MCIE) with a BUY recommendation and
price target of Rs 475/share, implying an upside of 27
27% from the CMP. Considering the market CMP (Rs) 371
share gains in India and Europe, management’ss focus on improving margin trends and its Upside /Downside (%) 27%
capability to generate strong operating cash flows,
lows, we believe the stock is currently trading at an High/Low (Rs) 622/304
reasonable 1-year forward consensus PE multiple of 13x against its long-term average of 15x. Market cap (Cr) 14,072
We believe MCIE will continue to source capex funding from its robust internal operating cash
Avg. daily vol. (6m) Shrs. 1,54,735
flows as well as has a further deleveraging potential over FY23 FY23-25E, which will be value-
accretive at the company’s bottom line. We recommend a BUY rating on the stock and base our No. of shares (Cr) 37.9
rationale on the following premise:
Shareholding (%)
Outperformance in Indian operations coupled with robust order book Jun-22 Sep-22 Dec-22

MCIE’s Indian arm contributed 64% of its overall CY22 revenue from continued business Promoter Group 74.9 74.9 74.9
operations. The company’s sales reported a robust st growth of ~29% YoY in CY22 which was FII 6.9 7.3 7.3
driven by the outperformance posted by its key customers (including MnM), increased orders by MF’s/Banks 7.7 7.4 7.2
Tata Motors, Kia, Hyundai, and input cost pass-through
through to customers. New orders won in India Others 10.5 10.3 10.5
stood at Rs 1,000 Cr on a annual basis including EV orders worth Rs 300 Cr from various
OEMs. To meet this growing demand, MCIE is enhancing capacities across all verticals – Bill Financial & Valuations
Valuatio
Forge, CIE Hosur, AEL, Gears, and Magnetics Division
Division, which will aid in its revenue growth Y/E Dec (Rs Cr) CY22 CY23E CY24E
moving ahead. Net Sales 8,753 9,984 11,240
EBITDA 1,172 1,443 1,742
Focus on the premium PV segment category in Europe
Net Profit 711 868 1,079
In Europe, the light vehicle industry (<6Tons) de-grew
grew by 1.3%YoY and MHCV segment stood EPS (Rs.) 10.4 10.4 10.4
flat for CY22. However, MCIE’s operations in the region grew by a robust 29% YoY. The PER (x) 18.3 16.2 13.0
outperformance was mainly driven by market share gains (40% YoY in CY22) led by EV/ EBITDA (x) 7.3 6.4 4.8
consolidation in the supply chain network. Furthermore, tthe decision to hive off the low-margin
P/BV (x) 2.6 2.4 2.0
truck forging business while simultaneously increas
increasing focus on a more profitable PV division
ROE (%) 14.0% 14.8% 15.7%
will lead to improved overall margins and the ROCE trajectory of MCIE moving forward.
Key
ey Drivers (%) (Growth
( in %)
Hiving off German truck forging entity to enhance profitability
Y/E Dec CY22 CY23E CY24E
MCIE’s decision to hive off CFG-CIE Forgings – Germany is seen to be a positive step as it was Net Sales 29% 14% 13%
a drag on the company’s EBITDA margins (3-5% 5% vs
vs. portfolio at 13-15%). Post the hive-off, EBITDA 24% 23% 21%
EBITDA margins from European operations is expected to improve by 150bps from the current Net Profit 80% 22% 24%
levels of 13%. This in turn, will accelerate the compan
company's consolidated EBITDA margins towards
a targeted 17-18%, which would be in line with the parent company
company’s CIE global operations. On Axis vs. Consensus
a side note, the company has already taken a one-timetime goodwill impairment loss of ~Rs 900 Cr
Cr. EPS Est. CY23E CY24E CY25E
Valuation & Recommendation Axis 23 28 34
We initiate coverage on the stock with a BUY rating and value the company at a 1-year Forward Consensus 23 27 32
PE multiple of 20x on Indian operations earnings and 9 9x on European business earnings, Mean Consensus TP (12M)
thereby arriving at our SOTP-based TP of Rs 475/share
/share (Exhibit 19), implying an upside of 27%
from the CMP. Our recommendation is based on (a) Improved share of business in India
Relative
elative performance
operations; (b) Improving outlook of the PV business in Europe and hiving off of a lower-
EBITDA margin trucking segment and (c) Strong FCF generations and negl negligible debt on the 325
balance sheet.
225
Key Financials (Consolidated)
125
(Rs Cr) CY22P CY23E CY24E CY25E
25
Net Sales 8,753 9,984 11,240 12,729
Jan-20 Oct-20 Aug-21 Jun-22 Mar-23
EBITDA 1,172 1,443 1,742 2,037
Mahindra CIE BSE Sensex
Net Profit 711 868 1,079 1,286
Source:: Capitaline,
Cap Axis Securities
EPS (Rs.) 19 23 28 34
ROE (%) 14.0% 14.8% 15.7% 16.0%
ROCE (%) 18.1% 19.4% 20.9% 21.3% Aditya Welekar
P/E Ratio 18 16 13 11 Sr. Research Analyst
Email:aditya.welekar@axissecurities.in
aditya.welekar@axissecurities.in
P/BV 3 2 2 2
EV/ EBITDA 7.3 6.4 4.8 3.7 Shridhar Kallani
Kall
Debt / Equity (x) 0.24 0.18 0.11 0.07 Research Associate
A
Email:shridhar.kallani@axissecurities.in
hridhar.kallani@axissecurities.in
Source: company, Axis Research

1
Financial Story in Charts

Exhibit 1: Healthy Growth in revenues led by Robust Order Book (Rs Cr) Exhibit 2: Operating Efficiencies to drive Improved EBITDA Margins

14,000 250 16.0% 17%

15.5%
14.5%
12,000 200 13.9% 15%
13.1% 13.4%
10,000 12.2%
150 13%

Hundreds
8,000
100 11%
6,000
8.3%
4,000 50 9%

2,000 0 7%
- CY18 CY19 CY20 CY21 CY22PCY23ECY24ECY25E
CY18 CY19 CY20 CY21 CY22P CY23E CY24E CY25E
EBITDA EBITDA %

Source: company, Axis Securities

Exhibit 3: Earnings Growth led by Strong Topline & lower interest expense Exhibit 4: Higher EBITDA to Improve Operating Cash Flows

140 12.0% Robust cash flow at operating levels in Rs Cr

9.6% 10.1%
120 8.7% 10.0% 200
8.1%
100 6.8%
8.0%
Hundreds

5.9% 150
80
4.5% 6.0% 149
60 129 138
108 100
87 4.0% 105 112
40 1.8% 71 97
55 2.0% 50
20 36 40
0 11 0.0% 0
CY18 CY19 CY20 CY21 CY22P CY23E CY24E CY25E CY21 CY22P CY23E CY24E CY25E
REPORTED PAT PAT % CY21 CY22P CY23E CY24E CY25E

Source: company, Axis Securities

Exhibit 5: Reducing Net Debt = Healthy Balance Sheet (in Cr) Exhibit 6: Lower Gross Debt to aid ROE Improvement

1500 1,070 2,000 20%

15.7% 16.0%
1000 14.0% 14.8%
1,500 12.8% 15%
500 178
0 1,000 7.7% 7.6% 10%
-500
500 2.2% 5%
-1000 --590
-899
-1500 0 0%
-1,319 -1,327
-1,501 -1,623
-2000 CY18 CY19 CY20 CY21 CY22 CY23E CY24E CY25E
CY18 CY19 CY20 CY21 CY22 CY23E CY24E CY25E Gross Debt ROE

Source: company, Axis Securities

Exhibit 7: FCF to remain positive in CY25 despite Capex

apex plans(in Cr) Exhibit 8: 1 YR FWD Consensus PE at Fair Valuation

24
1600 120
22
1400 100 20
1200 18
1000 80
16
800 60 14
600 40 12
400 10
200 20 8
0 0 6
4 Avg +1 SD -1 SD
2021 2022 2023 2024 2025
Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Mar-23
Jun-16
Sep-16
Dec-16

Jun-17
Sep-17
Dec-17

Jun-18
Sep-18
Dec-18

Jun-19
Sep-19
Dec-19

Jun-20
Sep-20
Dec-20

Jun-21
Sep-21
Dec-21

Jun-22
Sep-22
Dec-22

OCF Capex FCF

Source: Company, Bloomberg, Axis Securities

2
Company Overview

Mahindra CIE – a multi-technology, multi-product

product automotive component supplier with a strong focus on Verticals:
innovation, quality, and sustainability. The company is headquartered in Mumbai (India) and has operations in
 Forgings
over 20 countries, including Spain, Germany, Brazil, Mexico, China, and the USA. It operates as a subsidiary of
 Castings
CIE Automotive – an industrial group from Spain that specializes in providing ccomponents and sub-assemblies
assemblies for  Magnetics
the automotive industry. CIE Automotive has a global presence and is listed on the stock exchange in Madrid.  Stampings
 Aluminium
Mahindra CIE offers a wide range of products and services, including forging, casting, machining, and assembly
 Gears
of components for engines, transmission, chassis, and other applications. The company also provides design and  Composites
engineering services, as well as research and development capabilities, to meet the evolving needs of the
automotive industry.Its global presence, diverse
iverse product portfolio, and commitment to customer satisfaction make
it a trusted partner for customers in the automotive industry.

Exhibit 9: Presence across Global Geographies

Source: Company

Exhibit 10A: Geography-wise

wise revenue breakup (CY22) (Consol.) Exhibit 10B:Segment-wise
wise Revenue Breakup (CY22) (Consol.)

168 [2%]
670 [8%] 168 [2%]

1,085 [12%]
3,165
36% 4,484 [51%]
5,588
64% 1,117
1,061 [12%] [13%]

Forgings Stampings Aluminium Gears

INDIA EUROPE Castings Composites Magnetics

Source: company, Axis Securities

3
 Exhibit 11: CY22: India Segment-Wise Revenue Exhibit 12: CY22: EU Segment-Wise
Wise Revenue

3% 3%

12% 22%
6% 37%

19%
77%
20%

Forgings Stampings Aluminium Gears

Forgings Gears
Castings Composites Magnetics

Source: company, Axis Securities

Exhibit 13: CY22 India Revenue-End

End User Profile Exhibit 14: CY22 EU Revenue-End
End User Profile

8%
2%

20% 23%
49%

23% 75%

Cars+UV+LCV 2W Tractors MHCV CARS OFF

OFF-HIGHWAY 2W

Source: company, Axis Securities

Exhibit 15: Key Business Verticals

Division/ Verticals No Of Plants Capacities

INDIA

Forgings 7 plants 1.5 LC tons

Castings 1 plant 55k tons

Magnetics 1 plant 6k tons

Stampings 5 plants 1.85 LC tons

Aluminium 5 plants 18.5k MT HPDC + 4.2k MT GDC

Gears/machining 2 plants 8 Mn Gears + Shafts

Composites 2plants 10k SMC / 4k DMC.

EUROPE

CIE Germany(Trucking) 4 plants Discontinued Operation CY23

Metalcastello (PV) 3 plants

Source: company, Axis Securities

4
Competitive Strengths

1. Product Technologies and Geographies

 Forgings:: Leading producer of forged crankshafts both in India and Europe.

 Castings: India's leading producers of ductile iron castings including turbocharger housings, differential
housings and exhaust manifolds.
 Magnetics:: India's leading producer and exporter of cores and magnets for the Car and 2W industry.
 Stampings: Among the largest automotive
ive stamping companies in India.

2. Management Structure

Mahindra CIE is part of the global auto component player – CIE Automotive Group, Spain. The company has access to a diversified
multi-technology
technology which enables it to be a player with complex and value
value-added
added parts that could afford sufficient volume but with
relatively lower competition.

3. Continuous Focus on Operational Improvement to meet International Standards

The company is moving from a static to a dynamic manufacturing system led by Robotic pro
process automation – automating repetitive
and non-value added activities. With decentralize
ecentralize plant management and continuous focus on profitability
profitability,, the company is targeting to
reach consolidated EBITDA margins of 17%-18%18% by FY25.

Exhibit 16: Major Customers

IN INDIA IN EUROPE

MnM Renault

Bajaj Auto Volkwagen

Maruti Suzuki Ford

Tata Motors JLR

Hero Motorcycles BMW

GKN Fiat

Nexteer CAT

Hyundai Eaton

Kia CNH

Ola Electric

TVS Motors

Stellantis

Brembo
Source: company, Axis Securities

Exhibit 17: CIE, Spain (Promoter) increasing stake to take full control

Promoter CY21 CY22 Mar’23

CIE Spain 60.75% 65.71% 65.71%
MnM 11.43% 9.25% 3.25%
Source: company, Axis Securities

5
Key Growth Drivers

Robust Order Book to drive Indian Operations

The company has won new orders worth ~Rs 1,000 Cr in India. Moreover, in the EV segment, it has won new orders worth Rs 300 C
Cr. Orders
include more than 10 new customers and new platforms from the existing customers.

Exhibit 18: Getting ready with a broad range of EV Product Offerings

Source: Company

Increasing Content per share from Existing Clients and Addition of New Cliental

 MCIE has seven operational verticals located strategically close to OEMs in India and Europe.
 Increased share of business from existing customers ((M&M, Maruti, Bajaj Auto,, Tata Motors, Kia, Hyundai)
Hyundai
 Addition of new customers—Bosch,
Bosch, Royal Enfield, among many others.

Demand-led Capacity Additions

To meet this growing demand, MCIE is enhancing capacities across all ve

verticals – Bill Forge, CIE Hosur, AEL, Gears, and Magnetics Division,
which will aid in its revenue growth moving ahead The company is adding capacities across the forging, stamping, machining and magnetic
segments, which should drive its revenue growth.

Improving the outlook on the PV business in Europe and hiving off of a lower
lower-EBITDA
EBITDA trucking segment

MCIE shall be one of the major beneficiaries due to the consolidation of suppliers in the PV engine crankshaft business in th
the EU. The company
has also forayed into the aluminium forging business
usiness to offset the EV risk
risk. Post the hive-off,
off, EBITDA from European operations is expected to
improve by 150bps from current levels. This, in turn, will accelerate the company's consolidated EBITDA towards a targeted 1 17-18% in line with
parent entity’s operation.

6
Outlook & Valuation

Our valuation thesis is based on the company’s increased business in Europe with existing customers owing to
A. Supplier consolidation in the EU business

B. Increased business with order wins (Rs 1

1,000 Cr annually in CY22) in India owing to localization, import substitution (specifically for

EV products), the addition of new customers

customers, and shifting of production to India as a hub for export, which is based on China/Europe +

1 policy will aid the company to outperform its peers

peers.

C. Post the hive-off of the German trucking bu

business,
ness, EBITDA from European operations is expected to improve by 150bps from current

level; thereby accelerating the compan

company’s consolidated EBITDA towards a targeted 17-18%,, which would be in line with the parent

company’s CIE global operations.

D. Continuous increase in the stake by global parent company CIE, Spain.

E. Though near-term
term headwinds exist for the automotive industry
industry, we expect MCIE to have the capability to outperform the industry

&generate
generate strong Operating Cash Flows going forward.

At the current CMP the stock looks attractive at 13x 1 yr Fwd consensus PE against long term average
erage PE of 15x. In view of the above
growth drivers, we arrive at a TP of 475/share
/share (based on a SOTP valuation: Exhibit 19), which implies a 27% upside from the CMP.

Exhibit 19: MCIE valuation* Exhibit 20: 1 YR FWD PE Band chart

P/E Value(Rs / 600

SOTP - CY24E EPS Mahindra CIE Automotive 12M Fwd PE Band
multiple share)
500
India 19.8 20 396 400
300
Europe 8.7 9 78
200
Target Price 475 100
0
CMP 371
Dec-19

Jun-20

Sep-20

Dec-20

Jun-21

Sep-21

Dec-21

Jun-22

Sep-22

Dec-22
Mar-20

Mar-21

Mar-22

Mar-23
Upside/(Downside) % 27%

*12mth Fwd PE Multiple Price 8x 12x 16x 20x

Source: company, Axis Securities

Exhibit 21: Peer Comparison

Company Price Mkt Cap PE (x) EV EBITDA (x) FCF Yield (%)

Rs RsMn 2022 2023 2024 2025 2022 2023 2024 2025 2022 2023 2024 2025

MCIE 368 1,39,719 31.3 N/A 16.4 13.9 12.6 11.3 9.3 7.7 4% 0% 4% 5%
Sundram
1001 2,10,465 38.6 42.4 31.8 24.9 23.0 25.4 20.1 16.2 1% 1% 2% 3%
Fasteners
Bharat Forge 757 3,52,707 25.2 52.0 N/A 21.1 18.0 19.6 15.7 12.5 -2% 0% 3% 4%

JBM Auto 755 89,377 78.1 26.9 39.9 27.5 N/A N/A N/A N/A -5% 0% 2% 3%
th
Source: Bloomberg, Priced as of 10 Apr’23.

7
Management Profile

Key Management Personnel Experience

 Mr. Shukla, 59, holds a degree in Bachelor of Technology (B. Tech) and Master in
Mr. Shriprakash Shukla Business Administration. He is a Member of the Group Executive Board of Mahindra
Chairman (Non–Executive Director) and Mahindra Limited and as President is responsible for Group Strategy and the
Defence Sector. He is also the Chief Brand Officer for the Mahindra Group. He has over
38 years of rich, varied experience in managing large projects & operations.

 Mr. Arenaza, 51, holds a degree in Industrial Engineering (Industrial Engineering School
Mr. Ander Arenaza Álvarez of Bilbao) and a master’s in business administration (MBA) from Deusto University
Executive Director and CEO - MCIE (Bilbao). He has over 25 years of experience in the automotive sector and, before
Group joining CIE Automotive in 2007,
07, he held relevant positions in different automotive
companies. In 2016, he was appointed as CEO of MCIE Group and Executive Director
of the Company.

 Mr. Manoj Mullassery Menon was the Executive Director and CEO of Mahindra Gears
Mr. Manoj Mullassery Menon and Transmissions Private Limited (MGTPL), the erstwhile wholly-owned subsidiary of
Executive Director and CEO - Stampings, the Company. Mr. Manoj Mullassery Menon, 51 years, ears, is B. Tech in Production
Composites, Foundry, Magnetics Engineering from the National Institute of Technology, Calicut and has a Masters in
Products and Gears Divisions of the Management Studies from Symbiosis Institute of Business Management. Mr. Menon
Company has an experience of over 29 years from setting up green field projects to heading
operations and strategy. In 2017 Mr. Menon took over the Foundry and Magnetics
products division of the Company as CEO in addition to his responsibility in the Gears
Division.

Mr. K Jayaprakash  Mr. K Jayaprakash is the CFO of the company since Oct’16.58
16.58-year-old Jayaprakash is
Chief Financial Officer an associate member of the Institute of Cost and Work Accountants Of India. He has an
experience of over 30 years across finance functions of engineering, retail, steel, and
automotive industries.

Source: Company

Key Risks& Mitigation

 Slower-than-expected 2W Demand R
Recovery: In Indian Operations,the 2W segment forms23%
23% of MCIE's total revenue.As

Bajaj Auto is the main clientele in the segment

segment,a fall in demand from Bajaj may impact the topline.Therefore,
topline the company must

focus on diversifying its revenueshare

share content to other OEMs.

 Changing EU Regulatory Norms: The European Union has set a target of removing ICE vehicle
vehicles completely by 2035.75% of EU

business comes from Forgings business (earlier 50%) which is exposed to electrification risk
risk.Moreover,
Moreover, any prolonged slowdown

in the European market may impact the company’s business.MCIE

CIE generates ~35%+ of its sales from the European market

mainly from its ICE portfolio. The company must proactively engage and grow its EV product portfolioto stay ahead of its

competition.

 Hiving off Trucking Business: CIE has incurred a fair-value loss adjustment to the tune of ~Rs900 Cr
C from its discontinued

European operation. Given the significant contribution to EU revenue (20%) with a low EBITDA margin (~5%)
(~5%), we view the

decision as a positive one. However,, any further impairment may affect investor sentiments.

 Energy Price Volatility: As the company is mainly in the forging business (process-oriented),
oriented), any volatility in energy prices tends

to have a negative impact on the company's EBITDA. This shall impactt its operational cash flow impacting its balance sheet.The
sheet.

company must properly hedge itself against any such volatality to prevent unexpected losses.

8
Industry Overview
Indian Market
In CY22, the light vehicles segment (<6 tons) and the MHCV segment posted healthy growth of 23%/27% YoY respectively, followed by the 2W
segment which was up 3% YoY. Tractors on the other hand, posted a decline of 2.3% on a YoY basis.

Source: Company Presentation Q4CY22

As per the company presentation – Q4CY22

 Production in the Light Vehicles (<6Tons as per the EU classification) segment is expected to grow at a
healthy rate of 7.4% YoY in CY23; and at 2.5% CAGR over a period of 2022
2022-27E.
 The MHCV production is expected to grow at 2.9% YoY in CY23
CY23; and at 5.7% CAGR over 2022-27E.
27E.
 The domestic tractor industry is expected to grow at 6-8% CAGR over FY22-27E and
 The 2W domestic industry is expected to grow at 12-14% CAGR over a period of FY22-27E.

India Market Growth Outlook

Segment YoY Growth in CY2023 CAGR over CY2022-27

CY2022

Light vehicles (<6tons as per EU classification) 7.4% 2.5%

MHCV 2.9% 5.2%

TRACTOR 7%

2W’s 13%

Source: CompanyQ4CY22 presentation.

As per the ACMA, the auto-components

components industry has grown at 23% YoY in FY22, primarily driven by strong export
performance and replacement market growth. In
n future
future,it is expected to grow at 6% CAGR over FY22-26E.

Exhibit 22: Indian Auto Component Industry Sales (in ‘000 Cr)

600

500 528

400
Thousands

421
396
300 346 350 341
292
200 256

100

-
FY 15-16 FY 16-17 FY 17--18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY25-26E

AUTO COMPONENT INDUSTRY SALES (In '000 Cr)

Source: Acma, ASL.

9
European Market

In CY22, the light vehicles production de-grew

grew by 1.3% YoY and MHCV stood flat
flatdue to poor macro-economic
economic conditions.

Source: Company Presentation Q4CY22

As per the company, the European Market Outlook is as follows:

 Light Vehicle production is expected to increase by 4.7% YoY in CY23.
 The MHCV segment is expected to grow at 1.3% CAGR between CY22-27.

Segment YoY Growth in CY2023 CAGR over CY2022-27

Light Vehicles (<6 Tons) 4.7% 2.3%

MHCV -1.7% 1.3%

Source: Company Q4CY22 presentation.

10
Financials (Consolidated)
Profit & Loss (Rs Cr)
Y/E Dec CY21 CY22P CY23 CY24
Net sales 6,765 8,753 9,984 11,240
Raw materials (3,335) (4,776) (5,341) (5,789)
Staff costs (926) (902) (1,029) (1,236)
Other expenses (1,563) (1,903) (2,170) (2,473)
Total expenses (5,824) (7,581) (8,541) (9,498)
EBITDA 942 1,172 1,443 1,742
Depreciation (273) (296) (324) (348)
EBIT 668 876 1,119 1,394
Other income 47 58 59 59
Interest expense (35) (23) (19) (13)
Share of Profit/loss from associates 1 2 2 2
Exceptional (expenses)/income (13) 38 - -
Profit before tax 669 951 1,161 1,443
Tax expense (273) (240) (293) (364)
Adjusted PAT 405 683 868 1,079
Reported PAT 396 711 868 1,079
No. of shares 379 379 379 379
Reported EPS (Rs/share) 1.0 1.9 2.3 2.8
Adjusted EPS 1.1 1.8 2.3 2.8
Source: company, Axis Securities

11
Balance Sheet (Rs Cr)
Y/E Dec CY21 CY22P CY23 CY24
SHAREHOLDER'S FUNDS
Equity Share Capital 379 379 379 379
Reserves and Surplus 4,818 4,719 5,492 6,476
Total Shareholders Funds 5,197 5,098 5,872 6,855
Minority Interest
NON-CURRENT LIABILITIES
Long Term Borrowings 652 119 69 -0
Long-Term Finance/Lease Liabilities 174 43 43 43
Long Term Provisions 308 101 101 101
Deferred Tax Liabilities 381 328 328 328
Other LT liabilities 109 121 121 121
Total Non-Current Liabilities 1,624 712 662 593
CURRENT LIABILITIES
Short Term Borrowings 629 805 705 505
Short-Term Lease Liabilities 32 19 19 19
Trade Payables 1,938 2,135 2,341 2,379
Other Financial Liabilities 59 78 78 78
Other Current Liabilities 293 249 249 249
Short Term Provisions 89 55 55 55
Current Tax Liabilities 89 60 60 60
Disposal group 5 718 718 718
Total Current Liabilities 3,135 4,118 4,224 4,062
Total Capital And Liabilities 9,956 9,928 10,758 11,510
ASSETS
NON-CURRENT ASSETS
Gross Block 4,740 4,959 5,399 5,799
Accumulated Depreciation 2,062 2,359 2,683 3,030
Net Tangible Assets 2,677 2,600 2,716 2,768
Capital Work-In-Progress 125 119 229 329
Intangible Assets 3,910 2,946 2,946 2,946
Non-Current Investments 23 31 31 31
Financial Assets 107 192 192 192
Deferred Tax Assets [Net] 135 9 9 9
Income Tax Assets [Net] 39 39 39 39
Other Non-Current Assets 61 69 69 69
Total Non-Current Assets 7,076 6,006 6,232 6,384
CURRENT ASSETS
Inventories 1,349 1,211 1,504 1,540
Current Investments 413 544 544 544
Trade Receivables 669 861 1,012 1,078
Cash And Cash Equivalents
Cash in Hand 144 71 230 729
Cash at Bank 15 15 15 15
Short-Term Loans And Advances - 5 5 5
Income Tax Assets [Net] 52 0 0 0
Other Current Assets 232 237 237 237
Disposal group 5 979 979 979
Total Current Assets 2,880 3,922 4,526 5,126
Total Assets 9,956 9,928 10,758 11,510
Source: company, Axis Securities

12
Cash Flow (Rs Cr)
Y/E Dec CY21 CY22P CY23 CY24
Cash flows from operating activities
Profit before tax for the year 669 951 1,161 1,443
Finance costs 53 45 19 13
Depreciation and amortization 343 354 324 348
Cash Flow From operation before changes in WC 1,020 1,326 1,504 1,803
(Increase)/decrease in trade receivables & other assets 82 (298) (151) (66)
(Increase)/decrease in inventories (340) (180) (294) (35)
(Decrease)/Increase in trade payables & other liabilities 394 468 206 38
Income taxes paid (105) (198) (293) (364)
Net cash generated by operating activities 1,051 1,118 973 1,376
Cash flows from investing activities
Payments for PPE & IA (527) (501) (550) (500)
Net cash (used in)/generated by investing activities (755) (640) (550) (500)

Cash flows from financing activities

Dividends Paid - (95) (95) (95)
Net Proceeds/(Repayment) of LT borrowings (279) (394) (50) (69)
Net Proceeds/(Repayment) of ST borrowings - 88 (100) (200)
Interest paid (46) (38) (19) (13)
Net cash used in financing activities (363) (488) (264) (376)
Net increase/(decrease) in CCE (67) (9) 159 499
Opening Cash and cash equivalents 239 165 71 230
Effects of exchange rate changes (7) 3 - -
Closing Cash and cash equivalents 165 158 230 729
Source: company, Axis Securities

13
Ratio Analysis (x) / (%)
Y/E Dec CY21 CY22P CY23 CY24
Operational Ratios
Sales growth (% YoY) 11.8% 29.4% 14.1% 12.6%
EBITDA growth (% YoY) 87.7% 24.5% 23.1% 20.7%
Net Profit growth (% YoY) 271.3% 79.7% 22.0% 24.3%
EBITDA Margin % 13.9% 13.4% 14.5% 15.5%
Net profit Margin % 5.9% 8.1% 8.7% 9.6%
Tax Rate % 40.8% 25.2% 25.2% 25.2%
Efficiency Ratios
Total Asset Turnover (x) 0.69 0.88 0.97 1.01
Sales/Gross block (x) 1.4 1.8 1.9 2.0
Sales/Net block(x) 2.5 3.3 3.8 4.1
Working capital/Sales (x) 0.01 (0.01) 0.02 0.02
Valuation Ratios
PER (x) 22 18 16 13
P/BV (x) 2 3 2 2
EV/EBITDA (x) 6.3 7.3 6.4 4.8
EV/Sales (x) 0.87 0.97 0.92 0.75
Dividend Yield (%) 1.09% 0.73% 0.68% 0.68%
FCF Yield (%) 0.24% 0.55% 0.46% 0.65%
Return Ratios
ROE 7.6% 14.0% 14.8% 15.7%
ROCE 11.1% 18.1% 19.4% 20.9%
ROIC 9.33% 15.46% 18.77% 20.39%
Leverage Ratios
Debt / equity (x) 0.37 0.24 0.18 0.11
Net debt/ Equity (x) 0.26 0.18 0.10 0.00
Net debt/EBITDA (x) 1.41 0.77 0.41 0.00
Interest Coverage ratio (x) 19.26 38.56 57.88 110.54
Source: company, Axis Securities

14
 Mahindra CIE Automotive Price Chart and Recommendation History

Date Reco TP Research

12-Apr-23 BUY 475 Initiating Coverage

Source: Axis Securities

15
About the analyst

1. Sr. Research Analyst: Aditya Welekar is a PGDBM in Finance

inance with 10 years of experience in Equity
Market/Research.

2. Research Associate: Shridhar Kallani is a Chartered Accountant and a graduate from St.Xaviers
College Kolkata.

Sector: Automobiles
mobiles & Auto Ancillary

Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
1. Axis Securities Ltd. (ASL) is a SEBI Registered Research Analyst having registration no. INH000000297. ASL, the Research Enti Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Depository participant servi
services
ces & distribution of various financial products. ASL is
a subsidiary company of Axis Bank Ltd. Axis Bank Ltd. is a listed public company and one of India’s largest private sector ba bank and has its various
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Finance, author/s and the name/s subscribed to this report, hereby certify that all of the views expressed in this research rreport
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month period.Any holding in stock – No
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16
 DEFINITION OF RATINGS

Ratings Expected absolute returns over 12

12-18 months

BUY Over 10%

HOLD Between 10% and -10%

SELL Less than -10%

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Digitally signed by
NEERAJ NEERAJ CHADAWAR
CHADAWAR 17
Date: 2023.04.12
10:44:24 +05'30'