3QFY2012 Result Update | Automobile

February 7, 2012

Mahindra and Mahindra

BUY

Performance Highlights

CMP
Target Price

Y/E March (` cr)

3QFY12

3QFY11

% chg (yoy)

Angel est.

% diff

8,387
994
11.9
635

6,121
924
15.1
617

37.0
7.6
(324)bp
2.9

8,041
962
12.0
654

4.3
3.3
(11)bp
(2.9)

Net sales
Adj. EBITDA
Adj. EBITDA margin (%)
Adj. PAT
Source: Company, Angel Research

Mahindra and Mahindra (MM) reported mixed results for 3QFY2012.
The company registered better-than-expected top-line growth, led by robust
volume growth. However, net profit was below our estimates on account of
margin contraction due to higher purchases from its manufacturing subsidiary,
Mahindra Vehicle Manufacturers Limited (MVML). We have lowered our earnings
estimates for FY2012/13 by 6.8%/7% to factor in lower tractor volumes
(8% growth in FY2013E from 12% earlier) and higher purchases from MVML.
Nevertheless, due to attractive valuations, we maintain our Buy view on the stock.
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),
respectively. EBITDA margin at 11.9% (adjusted for reversal of forex loss) declined
by 324bp yoy, primarily due to increased purchases of finished products (up
265% yoy and 75% qoq) from MVML. Thus, adjusted net profit grew by modest
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
(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.
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 utility vehicle (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 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.

`689
`795

Investment Period

12 Months

Stock Info
Automobile

Sector
Market Cap (` cr)

42,331

Beta

1.0

52 Week High / Low

875/585

Avg. Daily Volume

218,106
5

Face Value (`)

17,622

BSE Sensex
Nifty

5,335

Reuters Code

MAHM.BO

Bloomberg Code

MM@IN

Shareholding Pattern (%)
Promoters

25.3

MF / Banks / Indian Fls

30.6

FII / NRIs / OCBs

35.8

Indian Public / Others

Abs. (%)
Sensex
MM

8.3

3m

1yr

3yr

0.3

(2.3)

89.5

(17.4)

3.1 402.0

Key financials
Y/E March (` cr)
Net sales
% chg
Adj. profit
% chg
Adj. OPM (%)
EPS (`)
P/E (x)
P/BV (x)
RoE (%)
RoCE (%)
EV/Sales (x)
EV/EBITDA (x)

FY2010
18,363
42.1
2,029
158.1
14.8
35.9
19.2
5.0
31.0
23.2
1.7
13.0

FY2011
23,044
25.5
2,537
25.0
13.0
43.2
16.0
3.9
28.0
21.6
1.3
11.0

Source: Company, Angel Research

Please refer to important disclosures at the end of this report

FY2012E
30,397
31.9
2,745
8.2
11.9
44.7
15.4
3.1
22.8
20.8
1.0
9.1

FY2013E
35,422
16.5
3,117
13.6
11.8
50.8
13.6
2.6
20.9
20.1
0.9
7.9

Yaresh Kothari
022-39357800 Ext: 6844
yareshb.kothari@angelbroking.com

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

22.9

4,454

5.1

13,249

10,432

27.0

58.9

62.4

4.5

1,283

1,019

5.7

6.1

75

3,161

1,043

14.1

6.2

3.6

1,990

1,626

8.9

9.7

4,680

3,810

(% of sales)

55.8

62.2

Staff costs

450

348

(% of sales)
Purchase of traded goods

5.4

5.7

1,555

426

(% of sales)

18.5

7.0

Other Expenses

708

614

8.4

10.0

(% of sales)
Total Expenditure

60.5
29.4

430

265

887

5.8
12.1
15.3

683
9.3

25.9
203
22.4

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

12.4

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

41

42

(2.6)

232

(82.4)

297

262

13.4

887

866

2.4

1,007

(11.9)

2,708

2,594

4.4

Other Income
PBT (excl. Extr. Items)
Extr. Income/(Expense)

12.3

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

12.0

16.2

Provision for Taxation

252

249

699

656

28

25

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

7.6

10.1

10.5

(27.5)

8.9

11.6

294.2

293.6

294.2

293.6

10.8

10.5

34.1

33.0

(% of PBT)

PATM
Equity capital (cr)
EPS (`)

13.2
1.2

238

6.0

24

294.0
2.7

13.1

(17.5)

6.5

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
Total Auto Sales
Tractor Sales - Domestic
Tractor Sales - Exports
Total Tractor Sales

7,587

5,020

51.1

7,239

4.8

20,543

13,480

52.4

124,989

95,225

31.3

121,454

2.9

348,440

269,447

29.3

62,009

55,488

11.8

54,266

14.3

173,519

145,493

19.3

3,745

3,120

20.0

3,128

19.7

9,755

8,773

11.2

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.

32.5
24.5

100,000

29.9
22.2

20.8

22.6

40.0
24.0

30.0
20.0

50,000

10.0

0

(1.0)

4.0
2.0
0.0

(1.6)

(2.0)

(2.7)

3QFY10

Source: Company, Angel Research

6.0

5.9

3.6

2.3

(0.7)

3QFY12

2QFY12

1QFY12

4QFY11

3QFY11

2QFY11

1QFY11

4QFY10

3QFY10

0.0

8.0
6.2

(4.0)

3QFY12

50.0

150,000

2QFY12

47.4

(%)
12.0
10.6
10.0

1QFY12

60.0

yoy growth (RHS)

4QFY11

200,000

(`)
450,000
440,000
430,000
420,000
410,000
400,000
390,000
380,000
370,000
360,000

3QFY11

57.5

Net average realisation

(%)
70.0

2QFY11

yoy growth (RHS)

1QFY11

Total volume

(units)
250,000

Exhibit 4: Net average realization improves 10.6% yoy

4QFY10

Exhibit 3: Strong volume momentum continues

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

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

73.6

116.4

Other segments

Other segments

3.6

0.6

2.1

PBIT/ Sales (%)

11.1

14.9

12.0

Auto segment

8.2

12.3

(412)

9.9

Farm segment

15.6

18.5

(283)

15.3

Other segments

14.5

2.9

8.5

7.8

3.6

11.9

15.1

(175)

9.5

13.4

(394)

33

15.6

17.6

(197)

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%.

800
600

50.0

500

40.0

400
15.9

15.0

16.5

15.1

12.7

13.3

12.3

11.9

10.0

Source: Company, Angel Research

3QFY12

2QFY12

1QFY12

4QFY11

3QFY11

2QFY11

1QFY11

4QFY10

3QFY10

0.0

(%)
16.0

10.8

10.1

10.9

8.9

14.0

9.0

12.0

10.0
7.6

10.0
8.0

300

6.0

200

4.0

100

2.0

0

0.0

3QFY12

14.9

9.4

3QFY10

20.0

Net profit margin (RHS)

14.0

700

60.0

30.0

Net profit

(` cr)
74.9

2QFY12

69.7

73.1

1QFY12

68.7

72.4

2QFY11

67.9

71.7

1QFY11

67.3

Raw material cost/sales

4QFY10

70.0

70.1

4QFY11

EBITDA margin

(%)
80.0

Exhibit 7: Adjusted net profit up by 2.9% yoy

3QFY11

Exhibit 6: RM cost pressure continues to impact margin

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

5.8

5.9

(11)

6.1

6.3

(23)

% of net sales
Other expenses

735

634

15.9

2,068

1,668

24.0

8.9

10.3

(139)

9.3

10.0

(68)

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

% of net sales
Operating profit

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

945

873

8.2

2,810

2,569

9.4

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

PBT
Exceptional items

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
(cr)

CMP
(`)

Value
(` 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

Key Subsidiary

Other Investments (at book value)

90
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)
Passenger Utility Vehicles (UV)

FY08

FY09

FY10

FY11

FY12E

FY13E

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

8,677

8,999

9,001

11,868

13,411

14,484

98,714

174,580

174,634

213,653

242,437

261,832

343,348

472,071

472,914

590,716

717,774

809,461

Exports Tractor Sales
Total Tractor Sales
Total Volume
Source: Company, Angel Research

Exhibit 11: Angel vs. consensus forecast
Angel estimates
Net sales (` cr)
EPS (`)

Consensus

Variation (%)

FY12E

FY13E

FY12E

FY13E

FY12E

FY13E

30,397

35,422

29,485

34,058

3.1

4.0

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
(x)
30.0

Absolute P/E

Exhibit 13: Premium/Discount to Sensex P/E
Absolute premium

(%)
60.0

Five-yr average P/E

Five-yr average P/E

40.0

25.0

20.0

20.0

0.0

15.0

(20.0)

10.0

Source: Company, Bloomberg, Angel Research

Jan-12

May-11

Oct-10

Mar-10

Jul-09

Dec-08

Sep-07

May-08

Feb-07

Jul-06

Nov-05

Apr-05

Sep-04

Jun-03

Jan-04

Apr-02

Jan-12

May-11

Aug-10

Dec-09

Apr-09

Jul-08

Nov-07

Feb-07

Jun-06

Oct-05

Jan-05

May-04

Aug-03

(80.0)

Dec-02

0.0

Apr-02

(60.0)

Nov-02

(40.0)

5.0

Source: Company, Bloomberg, Angel Research

Exhibit 14: Automobile – Recommendation summary
Company

Reco.

Ashok Leyland

Buy

Bajaj Auto

CMP Tgt. price
(`)
(`)

Upside
(%)

P/E (x)

EV/EBITDA (x)

RoE (%)

FY11-13E EPS

FY12E

FY13E

FY12E

FY13E

FY12E

FY13E

CAGR (%)

26

32

24.3

11.7

9.4

6.3

5.2

14.2

15.9

7.3

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)
Gross sales
Less: Excise duty

FY09

FY10

FY11

FY12E

FY13E

12,866 14,514

20,157

25,137

32,773

38,190

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
Total Expenditure
Net Raw Materials

1,585

14.6

42.1

25.5

31.9

16.5

10,187 12,035

14.5

15,647

20,038

26,766

31,228

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

639

601

658

998

666

730

Other Income
(% of PBT)

51.1

61.0

23.6

29.4

18.0

17.2

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)

-

-

1,251

986

2,788

3,394

3,695

4,241

Recurring PBT

PBT
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)
Basic EPS (`)

February 7, 2011

FY08

8.4

6.1

11.0

11.0

9.0

8.8

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

9

Mahindra and Mahindra | 3QFY2012 Result Update

Balance Sheet
Y/E March (` cr)

FY08

FY09

FY10

FY11

FY12E

FY13E

283

294

307

307

SOURCES OF FUNDS
Equity Share Capital

239

273

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

57

(18)

240

354

354

354

Deferred Tax Liability
Total Liabilities

6,994

9,297 10,947 13,073 16,842 18,757

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

546

647

964

986

1,026

1,127

-

-

-

APPLICATION OF FUNDS
Gross Block

Capital Work-in-Progress
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

404

283

847

(624)

(506)

(547)

14

13

-

-

-

-

Net Current Assets
Mis. Exp. not written off
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

65

320

990

685

-

-

Other income

(639)

(601)

(658)

(998)

(666)

(730)

Direct taxes paid

(303)

(200)

(759)

(858)

826

1,631

2,337

2,980

(Inc.)/Dec. in Fixed Assets

(692) (1,338)

(700)

(Inc.)/Dec. in Investments

(1,978) (1,571)

Less: Others

Cash Flow from Operations

Other income
Cash Flow from Investing
Issue of Equity

601

(2,031) (2,308)
28

1

(973) (1,708) (1,601)

(612) (2,927) (2,464)
658

3,099

998

666

(965)
730

(653) (2,903) (3,507) (1,836)
719

1,006

1,613

-

1,466 (1,173)

Inc./(Dec.) in loans

951

(475)

300

(300)

Dividend Paid (Incl. Tax)

325

321

312

624

898

898

(157)

449

19

291

-

-

811

697

(784)

(383)

(394)

19

899

(306)

304

66

1,363

861

1,574

1,743

615

919

861

1,574

1,743

615

919

984

Others
Cash Flow from Financing
Inc./(Dec.) in Cash
Opening Cash balances
Closing Cash balances

February 7, 2011

639

(950) (1,124)
2,796

1,015 (1,198)

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

7.6

7.2

5.0

3.9

3.1

2.6

P/BV
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

34.7

41.7

13.0

11.0

9.1

7.9

5.4

4.0

3.2

2.5

1.9

1.7

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

5.9

5.1

9.7

12.0

12.5

12.5

90.7

96.3

138.1

175.4

224.3

260.4

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

13.0

6.9

20.2

17.9

16.3

15.6

EV/EBITDA
EV / Total Assets
Per Share Data (`)

DPS
Book Value
Dupont Analysis

ROIC (Post-tax)
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

13.0

6.9

20.2

17.9

16.3

15.6

14.0

7.4

23.2

21.6

20.8

20.1

Operating ROE
Returns (%)
ROCE (Pre-tax)
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

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

(11)

(25)

(22)

(17)

(16)

(15)

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)

9.8

4.5

15.0

36.6

38.3

49.7

Turnover ratios (x)
Asset Turnover

WC (ex-cash) (days)
Solvency ratios (x)

Interest Coverage

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
1. Analyst ownership of the stock

Mahindra and Mahindra
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):

February 7, 2011

Buy (> 15%)
Reduce (-5% to 15%)

Accumulate (5% to 15%)
Sell (< -15%)

Neutral (-5 to 5%)

12